Stocks finished with slight gains Friday, capping off a week in which the major indexes stayed mostly within a tight trading range.
The Dow Jones industrial average gained 38.89 points, or 0.37%, at 10,416.41. The broader Standard & Poor's 500 index was up 2.95 points, or 0.26%, to 1,135. The tech-heavy Nasdaq composite index climbed 3.06 points, or 0.15%, to 1,986.73.
Stock groups on the move Friday included gold, metals and semiconductors, which rebounded somewhat from their Thursday losses. Gains in Alcoa (AA) led the Dow.
July crude oil futures closed at $38.75 a barrel, somewhat lower than overnight levels, on Friday. Supply concerns due to continuing violence in Iraq, and a reported strike by Norwegian oil workers had prices higher overnight. Meantime, oil exports from Iraq may resume by Sunday, according to press reports, citing an unnamed U.S.-led coalition official in southern Iraq. Oil-related stocks were somewhat lower.
The market's Friday advance came on heavier trading volume with the conclusion of the week's quarterly settlement of index futures and options. Historically, explains Paul Cherney, chief market analyst for Standard & Poor's, "the chance of a [market] move greater than 1% up or down is only 17%" when quarterly settlements occur in June, making volatility unlikely.
In economic news, U.S. current account data for the first quarter showed a deficit of $144.9 billion -- a new record, and a sharp change from the fourth quarter's revised $127 billion reading. The goods and services account was in the red to the tune of $136.9 billion, an 11.5% drop deeper into the red since the fourth quarter, with the balance on income down to a still very wide $12.7 billion.
Of note, foreign investment in the U.S. jumped to $447.6 billion from a prior $230.3 billion, easily covering the widening in the current account, says economic research firm, Informa Global Markets. "The sustainability of this latter account is, of course, a matter of some concern."
In corporate news, software outfit Adobe (ADBE), reported sound second quarter earnings of 44 cents per share, vs. 27 cents (GAAP) on a 28% revenue rise after Thursday's session. Adobe's third quarter guidance calls for earnings per share as high as 36 cents, on revenue between $360 million and $380 million, and expects to exceed its previous full year targets. S&P reiterated its accumulate rating. Shares finished lower.
Electronics manufacturer Solectron (SLR) posted third quarter earnings per share of a penny (pro forma) vs. a loss of 10 cents on a 29% sales rise. The company expects its fourth quarter earnings to arrive between 3 cents and 5 cents from continuing operations (excluding items) on sales as high as $3.2 billion. S&P has reiterated its hold rating on the stock, while CS First Boston upgraded Solectron to neutral. The stock ended with solid gains.
Red Hat (RHAT) posted first quarter earnings per share of 5 cents, vs. 1 cent, on a 53% revenue rise. On Tuesday, the company's chief financial officer, Kevin Thompson, resigned from the company to pursue other interests. Schwab SoundView said that the company's top-line miss is masking its strengthening fundamentals, and kept its outperform rating on the shares. First Albany downgraded the stock to neutral from buy. Shares dipped 10%.
Chattem (CHTT) has posted second quarter earnings of 36 cents, vs. 38 cents, as charges offset a 10% revenue rise. The maker of products such as Icy Hot, Gold Bond, and Selsun Blue expects a third quarter EPS between 41 cents and 43 cents, and a 2004 EPS as high as $1.65. Chattem ended solidly higher.
Career Education (CECO) fell sharply as an amended class action complaint awakens concern over the company's alleged falsification of student records. The company says the complaint is without merit. S&P downgraded the stock to hold.
Next week's earnings calendar includes third quarter results from pharmacy chain Walgreen (WAG) on Monday, with Wall Street powerhouses Morgan Stanley (MWD) and Goldman Sachs (GS), and tech outfit 3Com (COMS), set to report Tuesday. FedEx (FDX) reports on Wednesday, while Thursday brings news from footwear and apparel concern Nike (NKE), among others.
The economic calendar is busier at the end of next week, starting with a read of durable goods orders for May on Thursday. Traders will also get their weekly dose of initial jobless claims, plus a read on new home sales for May. Friday delivers the final gross domestic product figures, as well as Michigan's consumer sentiment survey results for June and existing home sales.
Treasuries finished lower in price Friday, amid strength in stocks, reversing earlier gains. Trading volume was thin ahead of the weekend.
In currencies, the dollar continued to suffer with the ballooning U.S. current account deficit. The euro was at $1.212, and the British pound, at $1.837. The dollar was at 108.64 Japanese yen.
European stock markets finished somewhat higher on Friday. London's Financial Times-Stock Exchange 100 index added 12.5 points, or 0.28%, to end at 4,505.80, as the May budget deficit narrowed in the U.K. Mortgage lending skidded in May across Britain. BP and Shell were making gains as August Brent crude oil futures rose on worries over Iraq oil production and a Norwegian oil worker strike.
In Paris, the CAC 40 ended up 22.82 points, or 0.61%, at 3,740.90. Germany's DAX index gained 14.33 points, or 0.36%, to 3,999.79, despite earlier worries that higher oil prices will further hamper economic recovery. Traders showed a muted reaction to reports that German producer prices rose 0.5% in May, reports MarketScope.
Asian stock markets finished lower, after an industry trade group reported a weak book-to-bill for the North American chip equipment industry in May, according to MarketScope. Japan's Nikkei 225 index slipped 225.82 points, or 1.95%, to 11,382.08, with tech stocks taking a beating after declines in their U.S. counterparts.
In Hong Kong, the Hang Seng index slipped 1.88% lower, or 227.31 points, to finish at 11,855.55. The index suffered from sharp losses in China plays, while interest rate hike concerns, as well as angst that China may take more tightening measures continue to weigh on sentiment.