Stocks pared their gains Friday, the final trading day of January, after an early boost from a trio of encouraging news on the economic front: GDP, Chicago PMI and consumer confidence.
Technology stocks led decliners, pushing the Nasdaq into the red. Energy stocks were also weak as the dollar rallied and oil prices declined.
Gross domestic product growth rose 5.7 percent in the final three months of 2009, topping estimates of 4.6-percent growth. While much of the growth was attributed it to inventory rebuilds, there were also some other pockets of strength, which gave a boost to stocks.
The Chicago PMI jumped to 61.5 in January from 58.7 in December, beating expectations. Economists had projected the Midwest manufacturing gauge would slip to 57.2.
And consumer confidence hit a two-year highin January: Reuters and the University of Michigan said their gauge of confidence jumped to 74.4 at the end of January from 72.5 in December. That was better than the 73 economists had expected and the highest since January 2008, a month into the recession.
The dollar hit its highest since Auguston the good economic news. Oil was flat and gold fell.
But traders were slightly worried about a couple of points in the GDP report: The sharp revision to the prior quarter's growth and consumer spending.
"[T]raders are viewing this [GDP] number with tepid enthusiasm," said Todd M. Schoenberger, managing director of LandColt Trading in San Antonio, Texas. "The biggest disappointment was the print on consumer spending, which only contributed 1.44% to GDP," he said. "Considering 70% of GDP comes from the American consumer, the outlook for future quarters still looks bleak considering the labor situation in the country."
As of Thursday's close, major indexes are on track to end lower for January. The Dow is down 3 percent so far for January. If it holds through today's session, that would be the biggest monthly loss since last February.
Wal-Mart was the biggest gainer on the Dow after Goldman Sachs raised its rating on the discount giant's stock to "buy," citing expense controls and increased margins among the reasons. It also raised its price target on the stock to $60 from $58.
Rounding out the Dow's top three were Caterpillar and Merck .
Techs got an early boost from a couple of titans in the sector but much of those gains fizzled by early afternoon.
Both Microsoft and Amazon.com exceeded expectations with their latest reports — Microsoft on the strength of the Windows 7 introduction and Amazon on a solid holiday-shopping season.
Microsoft shares skidded, and were in fact the biggest drag on the Dow, while Amazon contineud to be one of the best performers in the Nasdaq 100.
Nokia got a vote of confidence from Goldman Sachs, which raised its price target on the stock after Thursday's earning surprise, though it kept its rating at "neutral."
In other earnings news, Chevron reported its profit dropped 37 percent, as refining problems offset an increase in oil prices.
Former Dow component Honeywell skidded after the company report its profit slipped 1 percent, hurt by weak demand for aviation components and equipment used to heat and cool large buildings.
And Mattelbeat analyst estimates amid strong sales from its Fashionista Barbie and Hot Wheels lines but its shares still fell.
MGM Mirage shares tumbled after the Wall Street Journal reported that the company is seeking to divest its 50 percent stake in the Atlantic City Borgata casino resort.
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