Stocks Poised to End Week Lower; Banks Fall

Stocks were mixed Friday in light trading as results of the European bank stress tests came out slightly better-than-expected, but gains were limited after some disappointing news on consumer confidence.

The Dow Jones Industrial Average declined, after ending lower in the previous session.

Chevron and Microsoft were higher on the blue-chip index, while Merck slipped into negative territory.

The S&P 500 and the tech-heavy Nasdaq advanced. The CBOE Volatility Index, widely considered the best gauge of fear in the market, traded near 21.

Stocks are on track to snap a two-week rally.

Eight banks—including two Greek banks, five Spanish and one Austrian bank—have failed the European Banking Authority's (EBA) stress tests, according to the agency.

Meanwhile, consumer sentiment fell in July to the lowest level since March 2009amid increasing pessimism over falling income and rising unemployment, according to the Thomson Reuters/University of Michigan survey.

"Of course sentiment is lower," according to Todd Schoenberger, managing director of LandColt Trading. "The only surprise here is the number didn't drop nearly as much as it should have!"

"Macro data has been horrible the past couple of months... [Jobless] claims at 405,000 isn't a bright spot—14 straight weeks we've been north of 400,000," Schoenberger explained. "EPS growth rate for this earnings season is expected to be 13.5 percent, the slowest since the recession, dare I say it, ended!"

Citigroup slipped after the bank's profits surged, topping estimates, as the firm's revenue was essentially flat from the previous year. Rivals JPMorgan and BofA were also trading lower.

Meanwhile, Standard & Poor's put a broad range of financial firms on negative credit watch, warning they could all be downgraded if the U.S. has its credit rating cut.

Also among earnings, Google soared to lead the S&P 500 leaders after the search-engine giant reported earnings that exceeded even the most bullish forecasts. At least three brokerages raised their price target on the search-engine giant. Chinese "Google" Baidu also traded higher.

Apple gained after at least two brokerages raised their price targets on the iPod maker. IBM also rose after Collins Stewart raised its price target on the tech giant to $200 from $185.

Gold reach an all-time high, soaring $48.60, or 3.15 percent, this week to settle at $1589.80 an ounce. Oil prices gained as U.S. light, sweet crude rose near $97 a barrel and London Brent crude climbed above $117.

Most energy stocks were higher, including Chesapeake , Nabors and Hess.

In M&A news, Petrohawk Energy skyrocketed more than 60 percent after mining group BHP Billiton said it will buy the gas producer for $12.1 billion.

And Clorox jumped after billionaire investor Carl Icahn offered to buy the firm for $10.2 billion. And S&P raised its price target on the household goods producer to $77.

Meanwhile, investigations are progressing into the U.S. operations of News Corp after the UK phone hacking scandal. And News International’s chief executive Rebekah Brooks finally bowed to political pressure tendering her resignation.

Zillow raised the price range of its initial public offering to $16 to $18 per share from $12 to $14 per share. The real estate and housing data company filed with the U.S. securities regulators for an IPO of up to $51.8 million in April.

Stocks spiked briefly after GOP lawmakers said the House of Representatives is to vote next week on a plan to raise debt ceiling with equal cuts. Five rounds of talks this week still produced no agreement with the talks likely to resume over the weekend.

"Show me a plan in terms of what you're doing in terms of debt and deficit reduction. If they show me a serious plan I'm ready to move even if it requires me to make some tough decisions," Obama said during a White House press conference.

On the economic front, however, a gauge of manufacturing in New York State showed the sector unexpectedly contracted for the second month in a row. Meanwhile, U.S. consumer prices fell slightly more than expected in June to post their biggest drop in a year on weak gasoline costs.

Industrial production rose in June for the first time in three months after revisions, on a jump in utilities and mining output, according to a Fed study.

On Tap Next Week:

MONDAY: Treasury international capital, housing market index; Earnings from Halliburton and IBM
TUESDAY: Housing starts, Fed's Hoenig speaks; Earnings from BofA, Coca-Cola, Goldman Sachs, J&J, Wells Fargo, Apple and Yahoo
WEDNESDAY: Weekly mortgage apps, existing home sales, oil inventories; Earnings from Altria, United Tech, Abbott Labs, Blackrock, AmEx, Intel, Qualcomm and Ebay
THURSDAY: Weekly jobless claims, Philadelhia Fed survey, money supply; Earnings from AT&T, Morgan Stanley, Nokia, PepsiCo, Freeport McMoran, Travelers, Mircrosoft, AMD and SanDisk
FRIDAY: No major econ. news expected; Earnings from Caterpillar, GE, McDonald's, Schlumberger, Verizon, Honeywell

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