Stocks finished narrowly lower Friday, ending an up week with a whimper after disappointing guidance from a tech stalwart and an uptick in oil prices. Select tech and retail groups led losses, while utilities and energy were among the best performers, says Standard & Poor's MarketScope.
The Dow Jones industrial average fell 5.36 points, or 0.05%, to 11,115.32, rising 1.8% for the week. The broader Standard & Poor's 500 index slipped 2.14 points, or 0.17%, to 1,287.24, for a weekly gain of 1.6%. The tech-heavy Nasdaq composite index declined 12.27 points, or 0.53%, to 2,282.36, finishing the week 0.9% higher.
The markets will be closed Monday for President's Day. Earnings reports kick off the week Tuesday from Clear Channel (CCU), Federated (FD), Home Depot (HD), Medtronic (MDT) and Wal-Mart (WMT). Among economic reports Tuesday, the January leading indicators index is expected to rise 0.9%, says Action Economics.
One of the topics of the week was how many more interest rates hikes are coming from the Fed. Economic growth in 2006 may still be underestimated, which means rates could be pushed higher, according to some analysts. "The Fed will probably add more hikes in 2006 after pushing rates up to 5% in May," says David Malpass, chief global economist with Bear Stearns.
On the other hand, some investors bet that January's record-high temperatures were behind recent surprisingly strong economic data. "The market still expects an interruption in the long string of increases by the end the first half of 2006, and an abundance of liquidity continues to support high valuations among stocks," says Thomas McManus, chief investment strategist with Banc of America Securities.
Computer maker Dell (DELL) was down nearly 5% after the company forecast first-quarter earnings below Wall Street estimates late Thursday. Fourth-quarter profits rose 52%. Banc of America Securities downgraded the stock from buy to neutral. Earlier in the week, investors cheered a 30% increase in profits at rival Hewlett-Packard (HPQ).
Dell also denied rumors that it plans to start using chips from Advanced Micro Devices (AMD). Both AMD and Dell's current chip supplier, Intel (INTC), were lower.
Media conglomerate Time Warner (TWX) dipped 1%, as billionaire investor Carl Icahn abandoned his plans to push for a breakup into four separate companies. Separately, Time Warner's CEO reportedly indicated possible interest in acquiring Spanish-language media company Univision (UVN), which recently put itself on the block. News Corp. (NWS) also recently emerged as a potential suitor.
On the economic front, the overall producer price index jumped 0.3% in January, while the core index climbed 0.4%. Both wholesale inflation numbers came in stronger than expected, says Action Economics.
Some economists say they aren't worried by the high wholesale inflation data. "There are only sparse signs of pipeline inflation pressures," says Joseph LaVorgna, chief U.S. fixed income economist at Deutsche Bank.
The University of Michigan's preliminary February reading for consumer sentiment fell unexpectedly from 91.2 to 87.4.
In earnings news, electronics retailer RadioShack (RSH) was down more than 8% after posting 62% lower fourth-quarter earnings.
TurboTax software maker Intuit (INTU) reported higher second-quarter profits late Wednesday, but trimmed its guidance for the third quarter, citing disappointing sales. Shares fell 10%.
Among other companies in the news, Merrill Lynch (MER) said it will pay $164 million to settle 23 class-action lawsuits involving analyst coverage of Internet companies in the 1990s and early 2000s. The brokerage also recently announced plans to merge its investment management unit with BlackRock (BLK).
In the energy markets Friday, March West Texas Intermediate crude oil futures settled up $1.34 at $59.80 amid threats on foreign energy assets by a Nigerian militant commander.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 17.3 points, or 0.3%, to 5,846.2. Germany's DAX index gained 6.23 points, or 0.11%, to 5,795.48. In Paris, the CAC 40 index added 26.91 points, or 0.54%, to 5,000.
Asian markets ended mixed. Japan's Nikkei 225 index fell sharply 330.22 points, or 02.06%, to 15,713.45 as the fourth-quarter GDP deflator fell, prompting fears that deflationary pressures have not been eliminated. In Hong Kong, the Hang Seng index edged higher 24.81 points, or 0.16%, to 15,475.69. Korea's Kospi index climbed 18.41 points, or 1.4%, to 1,332.73.
The weak consumer sentiment data boosted Treasuries, but trade was light ahead of the early close, says Action Economics. Prices for 10-year Treasury notes rose to 99-22/32 with a yield of 4.54%, while 30-year bonds climbed to 99-27/32 for a yield of 4.51%. The yield curve was flatter but still inverted.