Stocks ended mixed Friday, with the Nasdaq inching higher while the Dow posted a modest loss. Investors were torn between dismal earnings and negative economic data on the one hand -- and the thought that much of the bad news may already be priced into beaten-down stocks. Pockets of strength were in semiconductors, communication equipment, telecom and biotechs.
Volume continued to be light. Many insiders are hoping for a broad-based heavy volume selloff that might signal a bottom for the market.
"We had some decent performance over the past few days in the semiconductor sector [with companies announcing] things are going to pick up within the next one to two quarters," says Barry Hyman, market strategist for Ehrenkrantz, King Nussbaum. "But at the same time, you can't overcome the continuing weak story in stagnant economic growth." Looking ahead, Hyman expects the market to turn around in the end of the third quarter to the middle of the fourth quarter but seems some bumps along the way with third quarter GDP "probably" worse than second quarter's.
U.S. gross domestic product (GDP) in the second quarter showed considerable weakness, rising 0.7%, slightly lower than what had been expected. The first-quarter figure was revised to a gain of 1.3%, from a gain of 1.2%. The second-quarter gain was the weakest since the first quarter of 1993. Consumer spending remains the stalwart of the U.S. economy, with personal consumption up 2.1% in the most recent quarter.
Several healthcare companies issued strong earnings reports Friday. UnitedHealth Group Inc. (UNH) said its second-quarter profits jumped 31% as it collected higher insurance premiums and increased people enrolled in its plans.
Among other stocks in the news, fiber optic component supplier JDS Uniphase (JDSU) posted a $0.36 fourth quarter loss per share, excluding one-time items, compared with $0.14 earnings per share in the prior year on a 6% sales decline. The company said its fiscal 2001 loss was a jaw-dropping $50.6 billion, the bulk of which was a write-down of goodwill from acquisitions.
Sprint Corp., parent of wireless operator Sprint PCS Group (PCS), said on Friday that it would launch share offerings of its PCS common stock to raise more than $2 billion.
The Dow Jones Industrial Average shed 38.96 points, or 0.37%, to close at 10,416.67. The tech-heavy Nasdaq Composite gained 6.77 points, or 0.33%, to 2,029.73. The broader S&P 500 Index added 3.00 points, or 0.25%, to 1,205.93.
Prices of U.S. Treasuries climbed Friday amid the latest economic reports. The U.S. economy grew at a 0.7% annual rate in the second quarter, the slowest pace in eight years, and below analysts' expectations. This latest read on gross domestic product reflects the slump in business investment in equipment and software and slower consumer spending.
In other economic data Friday, the University of Michigan's final reading of July consumer sentiment came in at 92.4, lower than the 93.7 expected by Standard & Poor's economic research unit MMS. Overall, the modest pullback in the index is consistent with the recent sag in the stock market and ongoing string of high-profile layoff announcements. But, MMS believes fiscal and monetary stimulus in the pipeline, along with the recent sharp pullback in energy prices will continue to support consumer sentiment.
New homes sales increased 1.7% in June, leaving sales at a 922,00 annual rate. The data are generally consistent with the solid gains seen in other housing measures, such as housing starts and existing home sales.
European markets were up sharply following an ugly week of earnings reports. In London, the Financial Times 100 gained 117.00 points, or 2.21%, to 5,403.10. In France, the CAC 40 Index was up 125.03 points, or 2.58%, to 4,967.15. Germany's DAX Index was up 95.65 points, or 1.69%, to 5,771.41.
Asian markets ended mixed. In Japan, the Nikkei lost 60.48, or 0.51%, to close at 11,798.08, on the heels of weak results at Sony and Fujitsu. The Hang Seng Index shed 142.35 points, or 1.18%, to close at 12,182.17. By Alan Hughes and Amy Tsao in New York