Major stock indexes closed lower Friday, after a report showed consumer sentiment fell sharply in August and Federal Reserve Chairman Alan Greenspan made a speech sounding warnings about the economy. Stocks related to the housing industry, including home improvement groups, homebuilders, and mortgage lenders, were down broadly, while cyclical stocks, including steel and industrial gases, were also weak, says Standard & Poor's MarketScope.
The Dow Jones industrial average fell 53.34 points, or 0.51%, to 10,397.29. The broader Standard & Poor's 500 index dropped 7.24 points, or 0.60%, to 1,205.13. The tech-heavy Nasdaq composite was down 13.60 points, or 0.64%, moving to 2,120.77.
In next week's economic reports, the preliminary second-quarter GDP figure will be reported Wednesday, followed on Thursday by the release of figures on personal income for July and the ISM manufacturing index for August. The employment report for August is due out Friday.
Among the companies reporting earnings next week are jeweller Tiffany (TIF) on Wednesday and tax preparation group H&R Block (HRB) on Thursday.
On Friday, Greenspan said in a speech in Jackson Hole, Wyo. that the increase in the market value of houses and stocks is partly a result of investors taking on risk for less compensation, and he warned that, "history has not dealt kindly with the aftermath of protracted periods of low-risk premiums." According to Action Economics, the text of the speech contained no signals that the Fed will pause in its rate-hiking anytime soon, although Greenspan is suggesting a cautious outlook.
Earlier, the final reading for the University of Michigan's August consumer sentiment survey showed consumer sentiment fell to 89.1, which was weaker than forecasts and well below July's reading of 96.5. Economists polled by Action Economics had been expecting the index to be unchanged from the preliminary reading of 92.7.
Crude oil prices fell to $66.13 per barrel Friday, down from the closing price in the previous session of $67.49 per barrel, a record New York Mercantile Exchange closing high for the active month contract.
In corporate news, drugmaker Merck (MRK) said that it might consider settling a small number of lawsuits involving its painkiller Vioxx, signalling a possible retreat from its previous statement that it would fight all litigation.
General Motors' (GM)) Australian business, Holden, said Friday that it would cut 1,400 jobs, or about 14% of its Australian workforce, by mid-2006 as it copes with higher commodity prices and weak sales of its signature Commodore model.
The Securities and Exchange Commission has launched an informal inquiry into Pixar Animation Studios (PIXR) and the disclosure of its results, according to the Wall Street Journal. The company recently missed its second-quarter earnings forecast because of higher than expected returns of the DVD "The Incredibles."
Treasuries ended the day lower Friday, following Greenspan's speech and the release of the consumer sentiment data. The yield on the benchmark 10-year note was at 4.19%.
European stock markets closed lower Friday. London's Financial Times-Stock Exchange 100 index dropped 27.60 points, or 0.53%, to 5,228.10.
Germany's DAX index fell 72.21 points, or 1.49%, to 4,783.80.
In Paris, the CAC 40 index fell 35.81 points, or 0.82%, moving to 4,342.7.
Asian markets finished higher Friday. Japan's Nikkei 225 index gained 34.32 points, or 0.28%, to 12,439.48.
In Hong Kong, the Hang Seng index gained 93.79 points, or 0.63%, to 14,982.89.