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Stocks Trade Mixed; CAT Gains, Microsoft Falls

Stocks traded mixed after slightly disappointing economic data, but all the major indexes hit multi-years on Thursday after gaining steadily throughout the week.

The Dow Jones Industrial Average rose more than 60 points after rallying to a new record high again on Thursday, despite slow first-quarter growth figuresand disappointing weekly jobless claims.

Among Dow components, Caterpillar, Boeing gained, while Microsoft and Alcoa fell.

The S&P 500 rose slightly, while the Nasdaq fell slightly. Both indexes also hit new multi-year highs on Thursday. The CBOE Volatility Index, widely considered the best gauge of fear in the market,rose slightly above 14.

Among key S&P 500 sectors, industrials and materials rose, while telecom and utilities fell.

Traders caught their breath Friday after a week filled with earnings announcements, economic news and an unprecedented press conference by Federal Reserve Chairman Ben Bernanke.

The upshot was stocks rallied to levels not seen for up to three years or more. Aside from the major indexes, the Russell 2000 Index of small cap stocks and the Dow Jones Transportation Index both hit all-time highs. That was despite news on Thursday that the economy slowed in the first quarter, and that jobless claims remained above 400,000 for a third straight week. Steady job growth occurs when claims are less than 400,000.

The market shrugged off news of slowing first quarter growth because it was already expected, given unusually bad winter weather, unrest in the Middle East and the multiple catastrophes in Japan, said Phil Orlando, chief market strategist at Federated Investors.

But none of these events is considered long-lasting, and Federated, along with other market observers, expect the U.S. economy will continue to grow.

"Much like a year ago, I think this is going to prove to be a temporary soft patch, not an inflection point leading to a double-dip recession," Orlando said.

Meanwhile, corporate earnings are good, and stock valuations remain reasonable, so the market is likely to continue rising, he said. Federated expected the S&P to hit 1,350 by the middle of this year, which it did this past week. Now the investment firm sees the broad-market index gaining another 5 to 10 percent at most before the end of the year.

"Stock price performance and valuation will be much more of a grind over the next year or two from here versus the surge over the last two years," Orlando said.

Of the 323 companies that reported earnings as of Thursday, representing 63 percent of the S&P 500, 73 percent beat earnings estimates and 69 percent beat revenue estimates, according to Thomson Reuters.

Caterpillar gained after soundly beating first-quarter earnings estimates, and giving a better forecast for the full year. The heavy-equipment maker's net income was $1.84 a share on sales of $12.95 billion, beating estimates for $1.31 a share on sales of $11.69 billion.

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Merck rose slightly after also delivering better-than-expected first-quarter results. The pharmaceutical company maintained its long-range forecast.

And another Dow component, Chevron , traded flat despite a boost in quarterly profits.

D.R. Horton , meanwhile, gained after reporting a surprising doubling of profits, helped by a tax benefit. The homebuilder's revenues slumped, however.

ITT fell after the global engineering and manufacturing firm said its defense sales would be hurt this year by U.S. budget issues.

Microsoft fell despite beating estimates for both profits and salesin its earnings release after the bell Thursday,as a drop in sales for Windows hinted that a downturn in personal computer sales may be underway.

Research in Motion sank after the maker of the Blackberry delivered a forecast for weaker earnings and revenues after the market closed on Thursday.

Silver and gold rose slightly as the dollar continued to sink toward three-year lows against a basket of currency. Silver rose to nearly $49 an ounce, while spot gold traded above $1,536 an announce.

China’s Yuan broke past the psychologically important level of 6.50 per dollar, raising expectations that Beijing will allow the currency to strengthen.

In U.S. economic news Friday, the Thomson Reuters/University of Michigan Consumer Sentiment fell in Aprilto 68.9, down from 70.6 in March.

The Chicago purchasing managers index for April came in at 67.6, slightly less than expected, and down from 70.6 in March.

Also, personal income rose 0.5 percent in March, and personal spending rose 0.6 percent, the Commerce Department said. Consumer spending rose as gasoline and food prices gained.

Trading is thin in Europe with the London Stock Exchange closed on Friday as the UK observes a public holiday to celebrate the wedding of Prince William to Catherine Middleton. European stocks closed higher,posting the best monthly performance since December.

Inflation in the euro zone rose 2.8 percent from 2.7 percent a month ago. The increase could mean the European Central Bank raises rates again.

MONDAY: ISM manufacturing index, construction spending, Boeing shareholder meeting, first GOP Presidential debate, RIM capital markets day, Sirius XM Radio antitrust case; earnings from Humana, Anadarko, Chesapeake and Massey.
TUESDAY: Factory orders, auto sales, Bristol-Myers shareholder meeting, Nokia annual meeting, Wells Fargo shareholder meeting; earnings from Pfizer, Clorox, NYSE Euronext, MasterCard, Comcast and CBS.
WEDNESDAY: Weekly mortgage applications, Challenger job-cut report, Fed's Rosengren speaks, ADP employment report, ISM non-manufcturing index, oil inventories, Fed's Lockhart speaks; earnings from Anheuser-Busch, AOL, Kellogg, Electronic Arts, MetLife, News Corp, Transocean and Whole Foods.
THURSDAY: Bank of England rate announcement, European Central Bank announcement, chain store sales, jobless claims, productivity and costs, Treasury STRIPS, money supply; Fed Chairman Bernanke speaks, Fed's Kocherlakota speaks, UPS shareholder meeting, Verizon shareholder meeting; earnings from GM, Cigna, CVS, AIG, Kraft and Visa.
FRIDAY: Non-farm payroll report, consumer credit, Alcoa shareholder meeting, flash crash anniversary; earnings from Constellation Energy and Berkshire Hathaway.

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