Stocks closed mixed Friday, wrapping up an intense week of third-quarter earnings. Traditional cyclicals rose on hopes of an economic rebound next year.
The Dow Jones industrial average gained 82.27 points, or 0.87%, to 9,545.17. The tech-heavy Nasdaq composite fell 6.51 points, or 0.37%, to 1,7776.45. The broader Standard & Poor's 500 index rose 3.70 points, or 0.34%, to 1,1103.79.
United Technologies (UTI) and Honeywell International (HON) led the advance in the Dow, in anticipation of more defense spending in the aftermath of the September 11 attacks.
And in an indication of just how much money will be flowing into defense company coffers, giant contractor Lockheed Martin (LMT) was awarded a $200 billion contract for fighter planes from the Pentagon after the close of trading. Lockheed beat out its rival Boeing (BA) for the lucrative "winner-take-all" contract.
A gloomy outlook from JDS Uniphase (JDSU) weighed on the tech sector during Friday's session. JDS posted a first-quarter loss per share of $0.20 compared with pro forma earnings per share of $0.18, on a 58% revenue decline. The company projects a second-quarter pro forma loss of $0.01 to $0.02 per share, on a revenue drop of 10% to 15% from the preceding quarter.
In other technology news, Ericsson (ERICY) reported a third quarter net loss of $0.05 per share, missing estimates by a penny. Revenues dropped close to 19% annually to $5.2 billion. The wireless company warned it will miss fourth-quarter estimates by $1 billion. Internet payment and validation services concern Verisign Inc. (VRSN) posted third-quarter earnings per share of $0.28 compared with $0.17 on a 47% rise in revenues.
The latest update on consumer sentiment was better than expected. The final reading on the University of Michigan's sentiment index for October was 82.7, up from 81.8 in September. The improvement suggests that consumers may be shaking off the barrage of anthrax headlines and returning to higher spending levels.
U.S. Treasuries ended higher Friday. The latest economic data provided some mixed signals. Consumer sentiment was better than expected, while the latest housing data was worse than anticipated.
New home sales in September were not as bad as expected, falling 1.4%, to 864,000. This reflects the lowest level of sales since August, 2000. The fall was exacerbated, in part, by the September 11 events. The new home sales update comes on the heels of the latest existing home sales data, which fell 11.7% in September. Despite 3-year lows in mortgage rates, rising unemployment and a reverse wealth effect have pressured the housing market.
Talk that the Treasury will continue with its buyback program into 2002 is helping Treasuries. More reports of anthrax and one news story that Osama Bin Laden may have gained nuclear materials should keep worried investors in bonds.
European markets posted robust gains, led by strength in Ericsson, ASML Holding and ABB Ltd. -- all companies focused on cost-cutting. In London, the FTSE 100 index finished up 102.00 points, or 2.10%, to 5,188.60, following a report that British GDP rose a better-than-expected 0.6% in the third quarter, which is better than any of the G7 nations. The Paris CAC 40 index rose 100 points, or 2.29%, to 4478.63. In Germany, the DAX index added 104.66 points, or 2.22%, to 4,820.26, after a survey showed that West German consumer confidence rose in September though it will likely drop in the months ahead due to the September 11 attacks on America.
In Asia, major markets ended mixed. Japan's Nikkei index finished at 10,795.16, down 0.78%. The market weakened late in the session as sentiment for the technology sector worsened after the release of grim earnings from Toshiba and NEC. These reports come on top of recent updates from Sony, Fujitsu and others. Earnings were hurt by falling demand for components like semiconductors, liquid-crystal-displays and optical fiber. In Hong Kong, the Hang Seng index finished higher, at 10,404.74, up 1.57%. By Suzanne Robitaille and Amy Tsao in New York