Stocks Close Mixed as Technology Rises
Stocks closed mixed as technology companies pulled the Nasdaq and Dow higher, although investors didn't have enough conviction in the future of the economy to break out of a tight trading range.
The Dow Jones Industrial Average rose 22.10 points, or 0.2 percent, to 10,594.83. Hewlett-Packard, Cisco and Intel rose. Alcoa and Bank of America fell.
The S&P 500slipped 0.41 points, or 0.04 percent, to 1,124.66, while the Nasdaqrose 1.93 points, or 0.1 percent, to 2,303.25.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 22.
Most key S&P 500 sectors remained lower, led by utilities, energy, and industrials. The technology and materials sectors rose.
The major indexes extended September's rally in the previous sessionand remained on track to stay in positive territory for the third straight week.
The market more or less treaded water amid light volume again today as investors failed to disrupt a trading range that has held the S&P below 1,230 and above 1,040 since mid-May.
One reason is Thursday's mixed economic data weren't providing enough information on the future direction of the economy, said Nate Peterson, senior derivatives analyst at Charles Schwab.
"I don’t feel it’s enough information to drive buyers or sellers," Peterson said.
Shares of economic bellwether FedEx fell after the transportation company reported its quarterly profit doubled, although it was just shy of expectations. The company also said it plans to cut 1,700 jobs to trim costs. Shares of rival UPS also slipped.
Pier 1 Imports soared after the home decor retailer reported better-than-expected results, citing strong sales, costs controls, and fewer promotions.
Tech giants Oracle and Research In Motion are scheduled to report earningsafter the bell tonight. Analysts expect Oracle to turn in a profit of 37 cent a share on sales of $7.27 billion and RIM to report earnings of $1.35 a share on revenue of $4.47 billion, according to a consensus from Thomson Reuters.
Entertainment stocks slipped lower after Credit Suisse cut the sector to "underweight" from "market weight." Specifically, the brokerage cut price targets for News Corp. shares to $16 a share from $17, Time Warner's and Viacom's both to $35 a share from $37, and Walt Disney's to $39 a share from $41.
Paper and forest products stocks were under pressure after BMO Capital Markets downgraded the sector to "market perform" from "outperform," citing the weak housing market and the chance of a double-dip recession. Clearwater Paper , KapStone Paper and Packaging , and Universal Forest Products all fell.
Gamestop jumped after the video game retailer announced it would buy back $300 million in stock and would retire $200 million debt.
Amazon.com shares were higher after brokerage Benchmark raised its price target on the online retailer to $165 from $148.
And, Netflix fell even after Credit Suisse raised its rating on the movie rental firm to "neutral" from "underperform" because of the company's shift to streaming videos.
The U.S. Justice Deparment is investigating whether Google's purchase of airline ticketing firm ITA Software will hurt rivals in the travel business who need airline data. Shares of Expedia and Orbitz were higher.
In the energy sector, Williams sank after the company's pipeline unit slashed its earnings outlook for the next few years because of low commodity prices. Rivals TransCanada and Atlas Pipeline also declined.
Quicksilver, Cabot Oil & Gas plummeted after Lazard Capital downgraded the firms to "sell" from "hold." Denbury Resources fell after the brokerage downgraded the energy company to "hold" from "buy." Meanwhile, oil prices fell below $75 a barrel.
Ford Motor jumped after Barclays Capital upgraded the automaker to "overweight" from "equal weight" and raised the price target to $16 from $15, citing increased earnings power based on good products and pricing, and reduced costs.
The new CEO of GM, Daniel Akerson, told reporters it may take a couple of years before taxpayers get all their money backfrom the automaker. Akerson said GM's goal is to repay the money, but the initial public offering expected later this yearwon't be enough.
Meanwhile, Barclays cut its forecast for the auto sales industry to 12 million units from 13.5 million units in 2011.
Siemens advanced after Goldman Sachs added the German engineering conglomerate to its "conviction buy" list.
Treasury Secretary Timothy Geithner sought to convince skeptical U.S. lawmakers he was taking a tougher line on China's currency and trade policies, but Beijing warned that pressure from Washington could backfire.
"China needs to allow significant, sustained appreciation over time to correct this undervaluation and allow the exchange rate to fully reflect market forces," said Geithner.
Gold prices soared above $1,273 an ounce, as currency market jittersand broader economic uncertainty enticed more investors towards the precious metal. Comex gold settled at $1,271.90, rising $5.20 per troy ounce.
In the day's economic news, jobless claims fell unexpectedly to 450,000, the lowest level in two months, the U.S. Labor Department said. The figure had been expected to rise to 460,000. Claims also were significantly below the high of 504,000 reached a month ago.
The Philadelphia Federal Reserve reported manufacturing in the Mid-Atlantic fell at a slower rate.
And the U.S. current account deficit widened to $123.3 billion in the second quarter, or 3.4 percent of GDP, the U.S. Commerce Department said.
Meanwhile, the August Producer Price Index rose 0.4 percent, slightly more than expected, according to the Labor Department. Core PPI was 0.1 percent in August, also in line with expectations, after rising 0.3 percent in July.
And nearly 51 percent of individual investors surveyed by the American Association of Individual Investorswere bullish for the week ended September 15, up 7 percent from last week.
Friday is quadrapule witching, when index futures, index options, equity options and security futures all expire, but like the equity markets, option volume is "surprisingly light," with only about 13 million contracts trading a day, instead of a year-to-date average of 15.3 million contracts a day, according to Peterson at Schwab.
The lack of volume is similar to what's happening in the equity markets, "which may imply that conviction in the most recent rally is lacking," Peterson and Randy Frederick, director of trading and derivatives at Schwab wrote in a research note.
Adding to light market volume: retail investors continue to pull money out of equity funds in favor of bond funds. In August, another $14.3 billion exited U.S. stock funds, for a year-to-date outflow of $42.2 billion, while $24.6 billion flowed into taxable bond funds, for a year-to-date gain of $168.4 billion, according to Morningstar, the fund tracking firm.
On the Calendar:
FRIDAY: CPI, consumer sentiment, quadruple witching
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