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Stocks Trade Mixed; Tech Rises, Merck Falls

CNBC.com
Friday, 17 Dec 2010 | 12:00 PM ET

Stocks continued to trade mixed despite evidence of a recovering economy and passage of a bill extending Bush-era tax cuts, as investors rekindled worries over European sovereign debt.

The Dow Jones Industrial Average fell more than 20 points after a modest rise to a new high on Thursday.

Merck , Pfizer and Verizon fell, while IBM and Boeing gained.

The S&P 500 fell slightly, while the tech-heavy Nasdaq gained, touching a 52-week high. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 16, to April lows.

Telecom, industrials and health care fell, while technology rose.

The euro began to fall sharply mid-morning on continued worries over Irish sovereign debt in the wake of Moody's five-notch downgrad of Ireland's debt. Meanwhile, European Union leaders agreed to implement a permanent financial safety net from 2013. The news also pressured European shares, as banks fell.

The dollar rose against a basket of currenciesas the euro fell, sending gold down to $1,369 an ounce.

Quarterly "quadruple witching," when stock index futures, stock index options, stock equity options and single stock futures expire, added to market volume on Friday, but not volatility, Ryan Detrick, senior technical analyst at Schaeffer's Investment Research told CNBC.com.

For the most part, good earnings and economic news was negated by renewed worries in Europe, leading the market to trade sideways, Detrick said.

BMO Financial Group of Canada said Friday that it would acquire Marshall & Ilsley for about $4.1 billion in a stock-for-stock transaction, sending the Wisconsin bank's shares soaring more than 15 percent. Each share of M&I would be exchanged for 0.1257 of a share of BMO.

Technology stocks got a boost from strong earnings reported on Thursday by Oracle, Research and Motion and Take Two Interactive Software.

Oracle rose more than 5 percent Friday after reportingprofits exceeded expectations as new software sales soared. Profits excluding one-time items rose to 51 cents a share in the fiscal second quarter, from 39 cents a share a year ago. Meanwhile, several brokerages raised their ratings and price targets for the software giant.

Shares of Research in Motion also rose after reporting surprisingly strong sales and profits. Third quarter earnings rose to $1.74 a share from $1.10 a year ago, as sales rose to $5.49 billion, up from $3.92 billion. Several brokerages also raised their price target for the Blackberry maker.

And Take-Two Interactive soared after reporting surprisingly strong fiscal fourth quarter results, thanks to sales of "NBA 2K11," a sports game.

Also in tech news, Yahoo rose slightly after news it plans to shut down underperforming websites, according to the Wall Street Journal. Susquehanna raised its price target for the Internet service to $20 from $19, and Williams Capital Research raised its rating on Yahoo to "perform."

In other news, Accenture soared above a 52-week high after reporting a 20 percent gain in fiscal third-quarter earnings, better than analysts estimated, on rising revenue. The consulting firm also raised its current-year and current-quarter forecasts. Several brokerages also raised their ratings and price targets for the stock.

Elsewhere, AstraZeneca sank after news approval of the biopharmaceutical's company's blood thinner drug, Brilinta, was delayed again. In addition, Natixis cut its rating on the company to "reduce" from "neutral."

International Coal's shares jumped after a report by Bloomberg that Massey Energy is considering acquiring the company.

MasterCard and Visa traded mixed on Friday, a day after both of the credit-card transaction companies dropped more than 10 percent on news the Federal Reserve is considering a proposal to cap "swipe fees." Goldman Sachs removed Visa from its "conviction buy" list, while Wedbush cut its price target for MasterCard to $238 from $270, and for Visa to $72 from $87.

In U.S. economic news, leading indicators for November rose 1.1 percent, the biggest rise since March and the fifth straight month of gains, the Conference Board reported Friday. The reading was in line with expectations.

While the $858 billion U.S. tax deal was considered positive for the market, since it will add dollars to the economy, some remain concerned about the U.S.'s growing deficit.

On the calendar next week:

MONDAY: Bank of Japan Monetary Policy Meeting; before-the-bell earnings from Jefferies Group; after-the-bell earnings from Adobe Systems, Darden Restaurants and Paychex.
TUESDAY: FCC votes on net neutrality, API weekly report; before-the-bell earnings from CarMax, Carnival and ConAgra; after-the-bell earnings from Nike.
WEDNESDAY: MBA mortgage applications, GDP, existing home sales, oil inventories; before-the-bell earnings from Walgreen; after-the-bell earnings from Bed, Bath & Beyond and Micron.
THURSDAY: NYSE early close; durable goods orders, personal income and outlays, jobless claims, consumer sentiment, new home sales, natural gas inventories, and money supply.
FRIDAY: Markets closed for Christmas; banks open.

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