Stocks Trade Mixed; Microsoft Advances

Stocks turned mixed after a mixed batch of economic and earnings news, and as investors continued to weigh the potential effect of the election and the next steps from the Federal Reserve.

The Dow Jones Industrial Average was bouncing between positive and negative territory throughout the morning, and was recently down more than 15 points after ending lower the previous session.

Chevron and Merck fell, while Alcoa and Microsoft rose.

The S&P 500 Index slipped and the Nasdaq rose slightly. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose to above 21.

Healthcare, financials and energy sectors were lower, while materials rose.

The market's lackluster activity on Friday reflected the busy week ahead, as investors wait for results from the Nov. 2 election, the Federal Reserve's policy making meeting on Wednesday and the October unemployment report on Friday, said J.J. Kinahan, chief derivative strategist at TD Ameritrade.

Most traders expect the House of Representatives will go the Republicans on Tuesday, but that the Senate will remain in the hands of Democrats, and the markets have accounted for that outcome, Kinahan said.

"The only thing that can come out of it now is surprises," he said. "If it comes out as expected, I would expect the market’s reaction to be muted."

In earnings news, Merck fell after beating profit expectations, but disappointing investors with revenue results. The drug maker had taken a nearly $1 billion charge related to a government investigation of its Vioxx drug.

Chevron declined after the oil company reported profits that disappointed investors, although the company's revenues were stronger than expected.

First Solar's shares plunged as investors focused on the solar company's comments that margins may be hurt in 2011, despite beating expectations on both revenues and profits.

Genworth Financial plunged after the insurer insurer's results were hit by large losses in mortgage insurance, largely from business in Florida.

But shares of Cigna rose slightly after beating profit expectations, and raisings its full-year outlook.

Meanwhlie, Microsoft's shares were among the few in the Dow to rise after reporting surprisingly strong profits and sales in its core Windows and Office software Thursday evening, as well as sales of the video game Halo.

Monster Worldwide skyrocked to the top of the S&P 500 after the online employment service reported bookings for the third-quarter that were much better than expected. Several brokerages upped their ratings and price targets for the stock.

Meanwhile, Estee Lauder's shares gained after beating expectations for both profits and sales, and issuing a brighter outlook for the year.

In other news, Halliburton shares could see further declines at the open after a White House panel found the company used flawed cement in the Gulf of Mexico oil well.

And Lionsgate sued corporate raider Carl Icahn, charging him with violating federal securities laws in his attempt to takeover the studio, by interefering with potential merger partners.

AIA Group, a spin-off of AIG , rose more than expected after its initial public offering in Hong Kong. Meanwhile, MetLife boosted its outlook for what it expects to receive in earnings from its acquisition of Alico from AIG.

MetLife's shares were lower after reporting lower-than-expected results on Thursday.

Seagate Technology's shares rose more than 6 percent despite reports that Kohlberg Kravis Roberts is considering backing out of a deal to take the computer firm private along with TPG Capital and Bain Capital, fellow private equity firms.

The market had plenty of economic news to digest on Friday, including a report that consumer sentiment fell in October to its lowest level since November 2009 The final October reading on consumer sentiment from the Thomson Reuters/University of Michigan was 67.2, down from 68.2 the prevoius month. A median estimate from economists called for the reading to come in at 68.0.

Also, the Chicago Purchasing Managers' Index for October was 60.6 in October, rising from the previous month's reading of 60.4 and beating expectations.

And, the U.S. Gross Domestic Product rose at a 2 percent ratein the third quarter, the Commerce Department reported on Friday. Economists surveyed by Reuters had forecasted the economy grew at an annual rate of 2 percent, up from the 1.7 percent growth rate recorded in the second quarter.

The rate of growth is not enough yet to reduce high employment rates or change perceptions of more monetary easing from the Federal Reserve next week.

The third-quarter employment cost index, meanwhile, rose 0.4 percent, slightly less that the consensus forecast of 0.5 percent.

On the calendar next week:

MONDAY: Personal income and spending, ISM manufacturing index, construction spending, shuttle launch; before-the-bell earnings from Allergan, Corning, Humana and Lowes; after-the-bell earnings from Anadarko Petroleum, and Principal Financial Group.
TUESDAY: Election Day, auto sales, FOMC meeting begins; before-the-bell earnings from BP, Pfizer, ADM, Kellogg and MasterCard; after-the-bell earnings from Electronic Arts, Hertz, and Wynn Resorts.
WEDNESDAY: FOMC announcement; MBA mortgage applications, Challenger job-cut report; ADP employment report, Treasury refunding announcement, factory orders, ISM non-manufacturing index, oil inventories; before-the-bell earnings from Anheuser Busch InBev, Time Warner, Aetna, CVS Caremark, Devon Energy, MGM Resorts, and Pulte Group; after-the-bell earnings from Chesapeake Energy, News Corp, Prudential Financial, Transocean and Whole Foods.
THURSDAY: Chain store sales, monster employment index, BoE announcement, jobless claims, productivity and costs, ECB announcement, natural gas inventories, Treasury STRIPS, and money supply; before-the-bell earnings from Cablevision, DirecTV, PG&E, and Unilver; after-the-bell earnings from Kraft, Fluor, and Starbucks.
FRIDAY: Pending home sales index, non-farm payrolls report, and consumer credit; Kansas City Fed President Hoenig speaks; before-the-bell earnings from Toyota, Liberty Media and Washington Post; after-the-bell earnings from Berkshire Hathaway.

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