Indexes got a lift Friday from favorable economic data and M&A news in the tech sector. Crude oil hit an all-time high
Stock moved higher Friday as oil reached an all-time high.
The Nasdaq led the way, as takeover activity in the technology arena and some encouraging economic data helped to lure investors back into the market after Thursday's pullback. Broader-market issues were up as data showing robust retail sales and tame wholesale inflation in September offset news that consumer sentiment has dipped.
On Friday, the Dow Jones Industrial Average gained 77.96 points, or 0.56%, to 14,093.08. The broader S&P 500 rose 7.39 points, or 0.48%, to 1,561.80. The tech heavy Nasdaq composite index jumped 1.21%, or 33.48 points, to 2,805.68.
Action in the broader market was positive, with 20 shares gaining in price for each 12 that fell on the NYSE. Nasdaq breadth was 18-11 positive.
Crude oil for November delivery surpassed $84 per barrel, an all-time high, before pulling back a bit. Oil ended the week at a record closing price, up 61 cents at $83.69 per barrel. Worries about oil supplies and geopolitical tension were pushing the price higher. The price of gold fell slightly, down $2.90 to $753.80 per ounce.
In economic news, U.S. retail sales climbed 0.6% overall in September, and rose 0.4% excluding autos. "The headline data are a little stronger than expected and continue to show little impact on spending from the financial market turmoil," says economic research outfit Action Economics.
Also, the U.S. producer price index was up 1.1% in September thanks to a bounce in energy prices. But the core index that excludes food and energy rose just 0.1%.
Both the retail sales and PPI number were double what was expected. Though they raise some inflation worries for the Federal Reserve, stock market futures moved into positive territory on news that implied solid economic growth. "The stock market has been more concerned with economic growth prospects than inflation recently," according to Standard & Poor's Marketscope.
However, Ray Stone of Stone & McCarthy Research Associates raised questions about the retail sales report. "A careful study of the data reveals troublesome indications that the housing and mortgage market turmoil has been increasingly apparent at retail establishments," Stone wrote. While auto dealers, gas stations and food stores did well, sales of furniture, building materials and at food service outlets showed weakness.
Meanwhile, the University of Michigan consumer sentiment index fell to 82.0 in October from an 83.4 reading for September, and weaker than the 84 expected. The economic outlook index fell to 71.6 from 74.1 in September, while the current economic conditions outlook index rebounded to 98.2 from 97.9 as some of the financial turbulence of recent months calms down.
Next week, earnings season continues with profit reports from Citigroup (C), Mattel (MAT), Pfizer (PFE), and many others. A range of economic data arrives on industrial production, housing starts, consumer prices, and mortgage applications.
Among stocks in the news on Friday, Oracle (ORCL) confirmed that it made an offer to buy BEA Systems (BEAS) on Oct. 9 for $17 per share. The news provided a lift to shares in the technology sector.
Citigroup's stock was downgraded from buy to sell by Deutsche Bank (DB) analyst Michael Mayo, who raised questions about corporate governance. "Given widely-reported investor dissatisfaction with senior management yet a continued absence of change, Citi still has to rise to the challenge of improving the connection between the owners and Citi's top execs," he wrote. Shares ended the day down 0.93% to $47.87 per share.
General Electric (GE) reported quarterly earnings of 54 cents per share, basically in line with analysts expectations and compared to 47 cents a year ago. Revenues were up 12%. Shares fell 1.37%, closing at $41.03 per share.
McDonald's (MCD) reported same-restaurant sales up were up 5.9% worldwide and 2.5% in the U.S. The stock rose 1.37%, ending at $57.02 per share.
Avon Products (AVP) shares rose after it announced a $2 billion stock buyback program.
J.B. Hunt Transport Services (JBHT) reported earnings of 38 cents per share, down from 39 cents a year ago. Higher expenses offset a 3.9% rise in revenue.
Home builder Centex (CTX) will take a charge of about $850 million as sales dropped 13% last quarter.
Computer Sciences (CSC) announced its European group signed two new contracts, totaling up to $171 million if all options are exercised in the next five to eight years.
European markets ended mixed Friday. In London, the FTSE 100 index was up 0.09% to 6,730.70. In Paris, the CAC 40 index dropped 0.32% to 5,843.95. Germany's DAX index was 0.09% higher at 8,041.26.
Asian markets fell overnight. Japan's Nikkei 225 index fell 0.73% to 17,331.17. In Hong Kong, the Hang Seng index dropped 1.01% to 28,838.37.
Treasury prices fell Friday after the release of new economic data, which suggest the economy is doing well and the Federal Reserve may leave interest rates unchanged later this month. The 10-year note fell 11/32 to 100-17/32 for a yield of 4.68%; the 30-year bond tumbled 20/32 to 101-16/32 for a yield of 4.90%.