With tech shares leading the way, stocks ended with gains Friday, as investors shrugged off negative economic news.
The Dow Jones Industrial average gained 126.65 points, or 1.52%, to 8,443.99. The tech-heavy Nasdaq composite index added 32.41 points, or 2.50%, to 1,331.12. And the broader Standard & Poor's 500-stock index was up 15.15 points, or 1.72%, to 897.65. Among the gainers were Microsoft (MSFT), IBM (IBM), 3M (MMM), and Merck (MRK).
Economic data will be center stage for the markets next week, especially with the Nov. 6 Federal Reserve policy-setting meeting drawing near. Reports due next week include October consumer confidence, third-quarter gross domestic product, Chicago-area and nationwide ISM manufacturing indexes. But the most significant release will be Friday's update on employment.
Economic research firm MMS International says figures in line with expectations for improvement in battered consumer confidence, a strong 3.6% annualized rate of growth for GDP, and some moderation in manufacturing survey weakness could prove supportive for a continued advance in share prices. Worse-than-expected data may well tip the balance back to pessimism.
Meanwhile, more marquee companies are expected to issue quarterly profit reports. Big names expected to report Monday include American Express (AXP) and Newell Rubbermaid (NWL). On Wednesday, Electronic Data Systems (EDS), Chubb (CB), Clorox (CLX), and TXU (TXU) are set to release results. Investors will survey Thursday's updates -- from the likes of ExxonMobil (XOM) and Aetna (AET) -- for any Halloween surprises.
On Friday, investors got some downbeat news about the health of the economy as orders for big-ticket items such as cars in September fell further than anticipated. The Commerce Department said orders for durable goods - big-ticket manufactured items - fell 5.9% in September, after dipping just 0.6% in August. The number was far worse than analyst expectations of a 1.8% decline, according to wire-service reports, and was the largest drop since November, 2001.
But while consumers have been shying away from buying autos, they've been snapping up homes. According to a report released Friday from the National Association of Realtors, new home sales rose 0.4% to a record 1,021,000 annual pace in September. The August figure was revised higher to a 1,017,000 pace (from 996,000 previously).
Existing home sales rose 1.9% to a 5.4 million unit pace. The figures are much stronger than expected, according to economic research firm MMS International, and the housing sector continues to be the bright spot of the economy -- helping to boost market sentiment Friday.
Raising further concern over the strength of economic recovery, consumer sentiment as measured by the University of Michigan fell to a nine-year low. The final read on October consumer sentiment fell to 80.6 from 86.1 in September, off forecasts for a reading of 81.1. The data suggest a possible big drop in Tuesday's consumer confidence survey as well, according to MMS International.
Earnings news remained a focus. Among the highlights, shares of Cigna Corp. (CI) lost more than a third of their value on Friday. On Thursday the insurer cut its profit forecasts due to higher health-care costs, a scenario one analyst called worse than worst-case, according to news reports.
Meanwhile in Washington, Sen. Paul Wellstone was killed Friday when his small chartered plane crashed near an airport runway, according to wire reports. The 58-year-old senator died along with members of his family, staff and two pilots. The prominent liberal was seeking a third term in the Senate, and his death throws the battle for control of the Senate into uncharted territory. It's unclear if his name will remain on the ballot.
Plus, a divided U.S. Securities and Exchange late Friday voted to approve five members of a new national accounting oversight board to be headed by ex-FBI chief William Webster.
Treasuries finished Friday's session with gains. In other economic news, consumer sentiment dipped to a 9-year low as stock market losses and sluggish job growth weighed on consumers' minds. The University of Michigan's final October consumer sentiment index fell to 80.6 from 86.1 in September. The new data raises concerns that the consumer-driven economic recovery may be in jeopardy.
European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index lost 52.60 points, or 1.28%, to 4,051.10. In France, the CAC 40 shed 18.25 points, or 0.59%, to 3,056.88. And in Germany, the DAX Index added 12 points, or 0.39%, to 3,102.01.
In Asia, the markets ended mixed. The Nikkei gained 111.99 points, or 1.30%, to 8,726.29. In Hong Kong, the market slipped 64.95 points, or 0.66%, to 9,722.54.