Stocks Mixed Ahead of Close; Industrials Gain
Stocks continued to trade mixed as strong results out of General Electric gave a lift to the broader market, while weakness among technology stocks, despite some stellar earnings reports, dragged down the Nasdaq.
The Dow Jones Industrial Average gained more than 45 points a day after the market turned in alackluster performance. Intra-day, the Dow surged more than 80 points to rise above 11,900, a level it hasn't seen since June 25, 2008, according to Schaeffer's Investment Research.
GE and Walt Disney led blue-chips higher, while Bank of America and Alcoa lagged.
The S&P 500 rose, while the tech-heavy Nasdaq edged lower for a third session. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell rose just above 18.
Among key S&P 500 sectors, industrials, financials and energy gained, while technology slid.
The dollar sank against a basket of currenciesas the euro gained, hitting a two-month high. Gold, meanwhile, closed lower for a third week, falling 1.43 percent to $1,341 an ounce.
"What we went through earlier in the week was a minor pullback, mostly due to resistance levels," said Peter Cardillo, chief market economist at Avalon Partners. On Tuesday, the S&P closed at about 1,295, very close to a psychologically important top of 1,300. The Dow, meanwhile, got somewhat closer to 12,000.
But investors seem to be focused more on the good news.
"I think it boils down to one thing: the earnings are coming in at levels that will be adjusted to higher PE ratios, so that’s a fundamental plus for the market," Cardillo said.
Most of the tech sector was under water often in spite of very good earnings reports. The softness may reflect January expirations of options contracts, analysts said.
Among the worst performers was AMD , despite the chipmaker's surprisingly strong resultsposted after the bell on Thursday. eBay also led tech stocks lower, despite the online auction company's upbeat earnings report earlier in the week.
Google, meanwhile, also traded lower despite reporting better-than-expected profits after the market closed Thursday. The search engine giant also stunned investors by announcing that Eric Schmidt will resign as CEO and that co-founder Larry Page, 37, will step into the position starting April 4.
Credit Suisse raised its price target for Google on Friday to $750 a share from $700, citing the results, and saying it doesn't expect the management changes to materially change the company's strategy.
Hewlett-Packard also gained after news four board members were leaving and would be replaced by five new members, including former eBay CEO Meg Whitman.
While it wouldn't be a surprise to see a market correction at this point, Linda Duessel, equity market strategist at Federated Investors, said she remains bullish on the market's long-term prospects.
Duessel pointed to strength in the jobs number this week, as the four-week moving average fell to about 412,000. "Once the four-week average goes below 400,000, the market should love that," she said. "The trend is clear, the employment stats are improving."
She also pointed to rising auto sales, and said they should continue to surge as the economy improves and people trade out of older vehicles.
"Vehicle sales recently were good and without the help of a government program," Duessel said. "This is bullish."
Bank of America shares slumped after the financial giant said it was hit by writedowns on home loans, while trading revenue was also lower than expected. CEO Brian Moynihan told CNBC, however, that the bank's core businesses are gaining strength.
Regional banks SunTrust and BB&T both beat expectations, sending the shares of most regional banks higher.
KeyCorp,HuntingtonBancshares, Zions Bancorp, and Fifth Third were among the gainers. Major banks, including Citigroup, Wells Fargo and JPMorgan also rose.
GE shares jumped past its 52-week high after the diversified manufacturer reported a profit of 36 cents a share on revenue of $41.1 billion, both topping analysts' consensus forecasts. CNBC is art of NBC Universal, which is being sold to Comcast.
General Electric CEO Jeff Immelt will be in the spotlight separately on Friday when President Obama names him as head of new advisory panel charged with promoting economic growth by investments in business on Friday.
Schlumberger shares sank despite posting higher-than-expected quarterly profits, boosted by strong demand in North America and the acquisition of a smaller rival. The slump comes after the world's largest oilfield services company enjoyed a rally of about 60 percent in its shares since the summer. Rival Halliburton, which reports earnings on Monday, rose slightly.
Moist energy stocks gained even as oil prices fell slightly on news of flush supplies, including Cabot Oil & Gas ,Occidental Petroleumand Exxon Mobil .
A slew of earnings from every industry sector are on tap for next week, beginning with American Express , and McDonald's on Monday, among others.
With no macroeconomic data scheduled for Friday, investors could look to European indicators for direction. Plenty of economic data is on schedule for next week, however. There are several housing releases, including the S&P Case Shiller Home Price index, and new home sales, as well an announcement after the Federal Reserve's policy setting meeting on Tuesday.
Germany’s IFO business sentiment indicator could lift sentiment after the index rose to its strongest level in twenty years in January, boosted by a manufacturing sector that has now fully recovered from the 2008 financial crisis.
European shares closed higher as mining companies got support from rebounding metals prices, and Spanish banks rose. The FTSEurofirst 300 Index gained 0.8 percent.
On the Calendar Next Week:
MONDAY: Before-the-bell earnings from McDonald's, Halliburton; after-the-bell earnings from American Express, Amgen, CSX, and Zions Bancorp.
TUESDAY: President Obama's State of the Union address; S&P Case Shiller Home Price Index, consumer confidence, Richard Fed business activity survey, state-by-state unemployment, two-year Treasury note auction, API weekly report; Bank of Japan monetary policy meeting; before-the-bell earnings from Johnson & Johnson, 3M, Travelers, Verizon and US Steel; after-the-bell earnings from Yahoo!
WEDNESDAY: Davos/World Economic Forum; mortgage applications, new home sales, oil inventories, five-year Treasury note auction, FOMC announcement; earnings before-the-bell from Boeing, United Technologies, Xerox; earnings after-the-bell from Netflix.
THURSDAY: Durable goods, jobless claims, pending home sales, natural gas inventories, seven-year Treasury note auction, money supply; before-the-bell earnings from AT&T, Caterpillar, and Colgate-Palmolive; after-the-bell earnings from Microsoft.
FRIDAY: GDP (first reading), consumer sentiment; NBCU/Comcast deal closes; before-the-bell earnings from Chevron and Honeywell.
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