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Markets & Finance

Stocks End Narrowly Higher

Stocks finished a low volume session slightly higher Friday. Better-than-expected economic data sparked early gains, but major indexes eased off ahead of Saturday's report from U.N. weapons inspector Hans Blix.

The Dow Jones industrial average was up 6.09 points, or 0.08%, to 7,891.08. The broader Standard & Poor's 500-stock index gained 3.87 points, or 0.46%, to 841.15. Meanwhile, the tech-laden Nasdaq composite index rose 13.6 points, or 1.03%, to 1,337.54.

The Dow and S&P averages posted their third consecutive losing months, dropping 2% and 5%, respectivly. Technology shares fared better in February. The Nasdaq gained 1% on the month, halting a two-month slide.

Geopolitical concerns will continue to hang over the markets going forward. "The markets are thick with bearish short positions and the only way to close out a short is to become a buyer," notes Paul Cherney, an S&P MarketScope analyst. "I would expect a sharp jump in prices if some of the uncertainty between the U.S. and Iraq is resolved. A scramble to cover outstanding short positions represents the fuel for upside."

Besides geopolitical developments, investors will have plenty of

economic data to mull in the coming week, including: the Institute for Supply Management index, January personal income and spending numbers, construction spending, factory orders, and fourth quarter productivity data. The most closely watched release, however, will be the employment report for February, slated for Friday.

Earnings data is expected to be light next week, but some big companies are slated to report, including: Goodyear Tire (GT), Healthsouth (HRC), Martha Stewart Living (MSO), Staples (SPLS), and Vivendi (V).

Rumors of possible signs of war in Iraq flew Friday, making investors wary of taking firm positions before the weekend. Meanwhile, Iraq reportedly agreed to destroy its Al Samoud missiles, in accordance with U.N. regulations.

On Friday, investor sentiment was boosted by relatively encouraging economic data. A government report said that gross domestic product advanced at a revised rate of 1.4% in the fourth quarter, up from an original 0.7% advance. The upward revision was greater than economists expected.

The February University of Michigan consumer sentiment index came in at 79.9, down from January's 82.4 reading but up from a preliminary 79.2. The Chicago purchasing managers' index fell to 54.9 in February from 56.0 in January. The drop was not as sharp as expected, and the new orders component actually rose to 59.0 from 58.0.

In company news, shares of retailer Gap (GPS) slipped 12% Friday. The clothier announced after Thursday's closing bell that sales in February failed to meet expectations.

Another struggling retailer saw its credit rating cut by Standard & Poor's. The agency downgraded the debt of retailer Sears Roebuck (S) to BBB+ from A-. Despite the downgrade, shares in Sears advanced 2.7% in Friday trading.

In other ratings news, AMR Corp. (AMR), parent of American Airlines, saw its corporate credit rating cut to 'B-' from 'BB-' by Standard & Poor's. The shares lost 6.8% in Friday's session.

Semiconductor stocks got a boost Friday. Integrated Device Technologies (IDTI), which reaffirmed its fourth quarter earnings outlook Thursday, saw shares shoot 15% higher after an upgrade from SG Cowen. A positive brokerage report sent shares of no. 1 semiconductor maker Intel (INTC)higher 3.35%.

Treasury Market

Treasuries finished well higher in price Friday afternoon. Prices spent much of the morning in negative territory thanks to better-than-expected economic data, but a pre-weekend safety bid and end-of-month buying combined to boost prices, according to economic research firm MMS International.

The benchmark 10-year note's yield fell to 3.69%.

World Markets

European markets closed higher. In London, the FTSE 100 index finished up 85.7 points, or 2.4%, to 3,655.6 on the strong U.S. GDP report. In Paris, the CAC 40 index gained 38.27 points, or 1.41%, to 2,754.07. In Frankfurt, the DAX index rose 33.83 points, or 1.35%, to 2,547.

In Asia, stocks finished mixed. In Japan, the Nikkei 225 index ticked ahead 3.66 points, or 0.04%, to close at 8,363.04. Hong Kong's benchmark Hang Seng index lost 11.58 points, or 0.13%, to close at 9,122.66.

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