Stocks were mixed Friday as investors were encouraged by a pair of better-than-expected manufacturing readings but dismal economic data out of Europe and weak U.S. retail reports capped gains.
"There are very ominous signs when you take apart the Dow Jones Industrial Average and S&P," J.J. Burns, president of J.J. Burns & Co. said. "We're petering out."
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A gauge of manufacturing in New York State showed the industry's pace of contraction slowedin May, the the New York Federal Reserve reported. And industrial production fell 0.5 percent in April, the slowest pace in six months.
Consumer sentiment snapped back to its highest level since September, the peak before the market meltdown.
Consumer prices were unchanged in April, as expected, but recorded their largest 12-month drop since 1955, as sluggish consumer demand limited companies' pricing power.
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Clothing retailer Ambercrombie & Fitch reported a loss of 31 cents a share, worse than estimates.
Fellow retailer JCPenney also disappointed the market, posting earnings of 11 cents per share that actually were a shade above Wall Street expectations. But the company lowered its guidance for the year ahead.
The dollar gained against the euro after growth domestic product data out of several countries showed Europe fell deeper into recessionin the first quarter. Germany's economy sank 3.8 percent, while France's dipped 1.2 percent in the first quarter.
"Fear and greed [have] a huge part to play right now with everyone desperate to call the bottom of the market but absolutely terrified that these so-called green shoots will quickly turn into dead weeds," said Andrew Turnbull, senior sales manager at ODL Securities told Reuters.
Sun Trust rose after the bank slashed its dividend to a penny and said it plans to sell up to $1.25 billion in common stock. Federal regulators had ordered the company to find $2.2 billion in new capital.
Shares of Citigroup also gained, but most other bank stocks were lower, including Bank of America and JPMorgan.
Insurer stocks advanced after six — Hartford Financial , Prudential Financial , Lincoln National , Principal Financial Group , Allstate and Ameriprise —, got a green light from the Treasury to receive TARP funds.
"Insurance companies are in a whole lot of trouble," Burns said, adding that news of them getting TARP funds was an "ominous signal".
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General Motors is expected to shutter up to 1,200 dealershipsand notices could go out as soon as today.
Investors piled into basic resources after hearing that Rio Tintoremains committed to a $19.5 billion tie-up with Asian state-owned miner Chinalco.
And drug maker Exelixis jumped more than 10 percent after an experimental drug the company is developing with Bristol-Myers proved to shrink brain tumors in some patients.
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