After spending much of the session in the red, stocks did a U-turn and finished higher Friday, while concerns about lower profits from key technology names loomed in the background.
The late-day turnaround capped a week in which the Federal Reserve, as expected, cut its benchmark short-term interest rate by 50 basis points on Tuesday, and indicated it may ease further to aid the struggling economy. The market subsequently rallied on Wednesday, when it also got a boost from tame Consumer Price Index data -- a gauge of inflation at the consumer level.
But concerns about corporate earnings returned Friday, keeping stocks in the red for much of the session before the late buying. Contributing to the cautious mood was Dell Computer (DELL), which met reduced earnings-per-share expectations, but forecasted second quarter revenues would fall 3% to 5% on weak consumer and corporate markets. Shares of Dell shed more than 4%.
Among other stocks in the news Friday, struggling telecommunications equipment maker Lucent Technologies Inc. (LU) and French equipment maker Alcatel (ALA) are in merger talks, according to sources cited by news reports. Lucent gained 1%, while Alacatel shares fell more than 6%.
Also in technology, hand-held computer maker Palm Inc. (PALM) cut its quarterly revenue and earnings estimates due to softening sales of its products. Shares of Palm finished sharply lower.
And in energy, investor appetite for new issues continued with Global Power Equipment Group (GEG), one of the largest makers of equipment for gas turbine power plants. It sold 7.35 million shares at $20 apiece in a $147 million new stock offering on Thursday, well above the expected price range. Shares of Global Power Equipment Group gained more than 11 points to close at $31 and change.
The Dow Jones Industrial Average gained 53.16 points, or 0.47%, to 11,301.74. The Nasdaq Composite index was up 5.15 points, or 0.23%, to 2,198.83. Meanwhile, the broader S&P 500 added 3.46 points, or 0.27%, to 1,291.95.
U.S. Treasuries finished mixed. In economic news, the U.S. trade deficit grew sharply in March, recording the largest month-to-month gain in at least nine years, as record demand for imported consumer goods overshadowed lower oil prices, the U.S. Commerce Department said on Friday.
European markets ended higher. In London, the Financial Times-Stock Exchange 100 index gained 10.50 points, or 0.18%, to 5,915. In Germany, the DAX Index was up 13.06 points, or 0.21%, to 6,186.87. In France, the CAC 40 added 45.59 points, or 0.82%, to 5,638.24.
In Asia, markets finished lower. The Nikkei lost 32.90 points, or 0.24%, to 13,877.77. In Hong Kong, the market closed down 178.69 points, or 1.31%, to 13,459.18. By Heesun Wee in New York