A drop in consumer confidence weighed on blue chips, while tech stocks got a boost from upbeat earnings news from Intel and Dell
Stocks ended the week mixed after a report showed a drop in consumer confidence. Tech stocks got a boost from positive earnings news from Intel (INTC) and Dell (DELL).
"Investors have turned more cautious recently following steady market gains that date back to March," says S&P MarketScope.
In economic news Friday, the final August University of Michigan Consumer Sentiment Index fell to 65.7 from the 66.0 level in July. However, the final number was up from the 63.2 preliminary reading for August. Also, July personal income was unchanged, and personal consumption expenditures rose 0.2% after a gain of 0.6% in June.
In slow summertime trading, the 30-stock Dow Jones industrial average finished the session down 36.43 points, or 0.38%, to 9,544.20. The broad Standard & Poor's 500-stock index edged lower by 2.05 points, or 0.20%, to 1,028.93. And the tech-heavy Nasdaq composite index rose 1.04 points, or 0.05%, to 2,028.77.
Treasuries were mostly higher as stocks fell, with the 10-year notes yielding 3.45%. Gold futures were up $11.10 to $958.40. Crude oil futures rose 44 cents to $72.93.
Next week, the main event is Friday's (Sept. 4) employment report. Though the soft jobs market is still seen as a drag on the economy, it too is showing improvement with the median forecast for payrolls showing a 225,000 decline, says Action Economics. Such a figure would be the smallest payroll decline since last August, says Action Economics.
The August ISM manufacturing and service reports will be released, with the median on the manufacturing index at 50.5, the first time in the black since July 2008, says Action Economics. Vehicle sales are expected to climb, helped by the "cash for clunkers" program, notes Action Economics.
Another report that should get attention is the FOMC minutes to the August 11-12 policy meeting that comes out on Wednesday.
Among stocks in the news Friday, Intel (INTC) shares rose after the chip maker said, as a result of stronger than expected demand for microprocessors and chipsets, it now sees third quarter revenue of $9.0 billion, plus or minus $200 million, vs. previous guidance of $8.5 billion, plus or minus $400 million. It now sees third quarter gross margin percentage to be in the upper half of the previous range of 53%, plus or minus two percentage points. Notes all other expectations are unchanged. S&P kept a buy opinion on the stock.
Late yesterday, Dell (DELL) posted earnings per share of $0.24 (including pretax expenses of $0.04), vs. $0.31 second quarter EPS a year ago, on 22% lower revenue. Street was looking for $0.23. The PC maker noted product shipments, revenue, operating income, gross margin, and earnings were all higher vs. the first quarter; the company continued to cut operating expenses. In the third quarter, it sees seasonal demand improvements from Consumer, U.S. federal government businesses, but notes the quarter is generally a time of slower demand from large commercial customers in the U.S. and Europe. S&P upgraded the stock to hold from sell, while Needham raised its price target and kept a buy.
AIG (AIG) shares continued to rally Friday. Recently, CEO Benmosche reportedly made optimistic statements regarding the prospects for turning AIG around. The strength in the share price could also be causing a short squeeze, says S&P MarketScope.
Tiffany & Co. (TIF) posted $0.46, vs. $0.64, second quarter EPS from continuing operations on 14% lower same-store sales, 16% lower total worldwide sales (both on a constant-exchange-rate basis). Street was looking for $0.33. For fiscal year 2010, it sees worldwide sales decline of approximately 10%, EPS from continuing operations of $1.65-$1.75, vs. previous forecast of $1.50-$1.60.
J.Crew Group (JCG) posted $0.29, vs. $0.28, second quarter EPS on flat same-store sales, 6.3% total sales rise. Sees third quarter EPS of $0.30-$0.33. Needham upgraded the stock to hold from underperform, while Citigroup reportedly upgraded it to buy from hold.
Marvell Technology Group Ltd. (MRVL) posted $0.18, vs. $0.24, second quarter non-GAAP EPS on 24% revenue drop. Street was looking for $0.14-$0.15.