A pullback in consumer sentiment and a gloomy outlook from Chevron dampened sentiment Friday. Earnings season kicks into high gear next week
U.S. stocks closed mixed Friday, with tech shares outpacing the broader market in light trading. Buying interest was kept in check by news of a drop in consumer sentiment, and a second-quarter profit warning from Chevron Corp. (CVX).
On Friday, the 30-stock Dow Jones industrial average ended lower by 36.65 points, or 0.45%, at 8,146.52. The broad Standard & Poor's 500-stock index was down 3.55 points, or 0.40%, at 879.13. The tech-heavy Nasdaq composite index gained 3.48 points, or 0.20%, to 1,756.03.
On the New York Stock Exchange, 15 stocks were lower in price for every 14 that were higher. Nasdaq breadth was 14-12 positive.
Treasuries were higher Friday. The dollar and yen were higher with a boost from negative U.S. economic data.
Gold futures were lower.
Oil prices fell below $60 per barrel in New York trading.
The market was bracing for next week's flood of corporate earnings releases with key financials including Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C), along with the likes of Google (GOOG), General Electric Co. (GE), Johnson & Johnson (JNJ), IBM Corp. (IBM), and Intel (INTC).
Also on the docket next week: Numerous data reports, including retail sales, industrial production, weekly initial jobless claims, the Philadelphia Fed index, and housing starts.
U.S. July consumer sentiment fell back to 64.6 in the preliminary print from the University of Michigan, compared to 70.8 in June and well below the 71 reading expected by markets. The index was at 61.2 a year ago.
Chevron said after the market close Thursday its second-quarter earnings from pumping oil will be improved from the first three months of the year, when low crude and natural-gas prices contributed to the worst results in years for oil companies. But the nation's second-largest oil company said earnings from refining fuel will be far lower versus the first quarter. Chevron said it was hurt by significantly lower refining margins in the U.S. It also noted that foreign currency effects related to the weak dollar would crimp the bottom line.
Treasury Secretary Timothy Geithner argued for improved transparency on OTC derivatives in testimony before the House Financial Services and Agriculture Committees, along with raising capital and margin requirements on customized derivatives and central clearing for standardized versions. He said he will work with the SEC and CFTC on the more difficult jurisdiction decisions and claims these new regulations will prevent regulatory arbitrage and provide a foundation for a more stable financial system.
In other economic news Friday, the U.S. trade deficit narrowed to $26.0 billion in May, from a revised $28.8 billion shortfall in April (from a deficit of $29.2 billion previously). Excluding petroleum, the deficit narrowed to $12.7 billion from -$13.9 billion. Imports declined 0.6%, while exports rebounded 1.6%.
U.S. import prices surged 3.2% in June, while export prices rose 1.1%. The 1.3% rise in May import prices was revised up to 1.4%, and May export prices were revised down to a 0.5% increase versus 0.6% previously. A 20.3% jump in petroleum prices paced the strength in import prices.
China's exports fell for an eighth month as the global recession cut demand, highlighting the economy's dependence on stimulus spending to boost growth. Overseas sales slid 21.4% in June from a year earlier. That compares with the median estimate of a 21% decline in a Bloomberg News survey of 19 economists and a record 26.4% drop in May. China, the world's second-biggest exporter, has stalled gains by the yuan against the dollar and increased export-tax rebates as the government revives economic growth with a 4 trillion yuan ($585 billion) stimulus package. The smallest decline in imports in eight months may signal the worst is almost over for the nation's trade.
The Obama administration is pressing mortgage-servicing companies to step up their efforts to modify troubled loans under its housing-rescue program, the latest sign of frustration with the pace at which mortgage companies are reworking troubled loans. "We believe there is a general need for servicers to devote substantially more resources to this program for it to fully succeed and achieve the objectives we all share," Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan said in a letter to 25 mortgage-servicing firms.
General Motors Corp. completed a major step in its turnaround on Friday and closed the sale of its good assets to a new, government-backed carmaker, at a speed unimagined by auto and bankruptcy experts even six months ago, according to a New York Times report.
Among companies posting earnings results Friday, Shaw Group (SGR) reported third-quarter earnings per share (EPS) of $0.09, vs. $0.62 one year earlier, despite a 2% revenue rise. Shaw posted $0.57 vs. $0.67 third-quarter EPS excluding its Westinghouse segment. Shaw said third quarter EPS were negatively impacted by increased costs on two fossil contracts within its Fossil & Nuclear segment. It sees 2009 EPS, excluding the Westinghouse segment, to be about $2.00.
Infosys Technologies (INFY) posted $0.55 vs. $0.54 first earnings per American Depositary Share (ADS) despite a 2.9% revenue decline. The company sees $1.97-$2.00 fiscal 2010 earnings per ADS on $4.45 billion-$4.52 billion in revenue.