Stocks closed mixed Friday, after the release of a report showing that January core producer prices rose at their highest level in six years. Drugmakers were boosted by a Food and Drug Administration panel ruling that Pfizer's (PFE) Celebrex painkiller should stay on the market, while rate-sensitive stocks such as banks, brokers and mortgage related firms suffered losses, according to Standard & Poor's MarketScope.
On Friday, the Dow Jones industrial average gained 30.96 points, or 0.29%, to 10,785.22. The broader Standard & Poor's 500 index gained 0.84 of a point, or 0.07%, to 1,201.59. The Nasdaq composite index dropped 2.72 of a point, or 0.13%, to 2,058.62.
Looking ahead to next week, companies that will be reporting earnings include home-improvement giant Home Depot (PFE) on Tuesday, apparel retailer Gap (GPS), entertainment group Viacom (VIA) on Thursday, and broadcaster Clear Channel Communications (CCU) on Friday.
A number of closely watched economic reports will be released next week, beginning with the consumer price index for January on Wednesday. The index is expected to rise 0.2%, up from a decline of 0.1% in December. On Thursday, figures on January's durable goods orders are expected to show a 0.1% increase in orders, after a 1.1% increase in December. On Friday, the preliminary reading of fourth-quarter Gross Domestic Product is forecast to rise 3.5%, up from the original estimate of 3.1%.
In economic news Friday, Feb. 18, core producer prices rose an unexpectedly high 0.8% in January, the fastest rate in six years, thanks in part to price increases in tobacco and cars. The overall producer price index rose 0.3%, which was in line with economists' predictions, but the core prices, which strip out energy and food prices, were forecast to rise 0.2%. In December, the overall index declined 0.3% and core prices rose 0.2%.
The University of Michigan's monthly gauge on consumer sentiment came in lower than expected at 94.2, down from 95.5 in January. Economists had expected the number to come in at 95.5.
Crude oil futures settled up 1.7% at $48.35, supported by predictions of cold weather in the Northeast and ongoing concerns about an OPEC production cut in March.
Among the companies reporting results Friday, Campbell Soup (CPB) posted second-quarter earnings per share of 57 cents, unchanged from a year earlier as higher costs offset a 6% sales rise.
Pharmaceutical companies were in the spotlight, as a Food and Drug Administration advisory panel ruled that Pfizer's Celebrex painkiller could continue to be sold, even though it poses risks to heart health.
On Thursday, the research chief at Merck (MRK) said that the drugmaker would consider bringing painkiller Vioxx back onto the market if the FDA panel found that risks associated with the drug are also in other medicines. Merck withdrew Vioxx in September after a trial tied the drug to heart attacks and strokes. Pfizer's stock rose nearly 6% on Friday, while Merck's rose 11%.
In merger news, Qwest Communications (Q) said it plans to submit a new, modified bid for MCI (MCIP) after its initial bid was turned down in favor of a competing $6.7 billion cash-and-stock offer from Verizon (VZ) earlier this week. MCI's board voted Sunday to accept the Verizon deal. MCI's shares closed 7.7% higher.
The Wall Street Journal reported that department-store chain Federated (FD) is again in talks to buy rival May (MAY)May (MAY). After earlier negotiations broke down, the stores resumed talks this week and are $2 a share apart on a price, according to the newspaper. May's shares closed 5.5% higher, and Federated's closed 1.7% lower.
Video rental chain Hollywood Entertainment (HLYW) told its shareholders that they should reject a hostile takeover bid from Blockbuster (BBI) and accept a lower offer from Movie Gallery (MOVI). The Hollywood board said there were uncertainties in Blockbuster's $991.6 million cash and stock offer that made the $850 million Movie Gallery offer more attractive.
Treasuries fell further in price on Friday, following the unexpectedly strong rise in core producer prices, after sliding earlier in the week following Fed Reserve Chairman Alan Greenspan's comments to Congress. In the afternoon, the yield on the 10-year note was at 4.26%.
European stock markets closed mixed Friday. In London, the Financial Times-Stock Exchange 100 ended the day flat, falling 0.20 points to 5,057.20. Gallaher Tobacco was a decliner, after Japan Tobacco reported results without mention the British tobacco group as a possible acquisition target.
Germany's DAX index fell 10.21 points, or 0.23%, to close at 4,359.47.
In Paris, the CAC 40 index gained 23.52 points, or 0.59%, to close at 4,029.02, led by luxury names PPR and LVMH.
Asian markets closed higher Friday. Japan's Nikkei-225 index added 77.40 points, or 0.67%, to close at 11,660.12, after the central bank said Japan's economy is recovering. Top gainers were retailer Ito-Yokado and Japan Tobacco.