Stocks ended mostly lower in thin, pre-holiday trading on Thursday despite a bullish outlook from industry bellwether General Electric (GE ) as investors were unable to shake concerns about creeping inflation.
The Dow Jones industrial average finished off 12.34 points, or 0.12%, to 10,443.68. The broader Standard & Poor's 500 index eased 0.99 points, or 0.08%, to 1,171.54. The Nasdaq composite index added 0.84 points, or 0.04%, to 1,991.06.
Looking ahead, next week's economic calendar is stacked. Consumer confidence figures for March due out next Tuesday. The gauge is seen ticking down to 102 from 104 in February. On Wednesday, final Gross Domestic Product figures are expected to show the U.S. economy grew 3.8% in the fourth quarter.
And on Thursday, a gauge of regional manufacturing activity--the Chicago Purchasing Manager's Index--is seen showing a slight contraction to 61.5 in March from 62.7 in February.
But the week's marquee release will come Friday: the March employment report. The economy is expected to have added 180,000 jobs in March vs. the 262,000 added in February. The unemployment rate is seen holding steady at 5.4%.
Among the big-name companies set to report earnings next week: Drugstore chain Walgreen (WAG ) on Monday, electronics retailers Best Buy (BBY ) and Circuit City Stores (CC ) on Wednesday and financial services outfit A.G. Edwards (AGE ) on Thursday.
Trading was light on Thursday, Mar. 24, as Wall Streeters were leery of making big commitments ahead of a three-day weekend. Markets will be closed on Friday in observance of the Good Friday holiday.
Thursday's negative finish came despite data releases that painted a picture of a U.S. economy that is not inflationary. But investors remained concerned two days after the Federal Reserve had warned of upward pressure on prices. Such a warning could be a signal of a tougher Fed stance on inflation down the road.
A report on Thursday showed U.S. durable goods orders rose 0.3% in February, following a 1.1% drop in January. Expectations were for something close to 0.9% gain, according to Informa Global Markets. But orders excluding transportation goods were down 0.2%, while orders excluding defense rose 0.2%. Core capital goods orders, excluding defense and aircraft, fell 2.1%.
Informa says orders breadth was obviously rather weak, with the overall volume of orders below what was hoped. Shipments fell 1.6% following a 0.9% rise in January - shipments are down so far this year. Durable goods inventories rose 0.6% on heels of a 1.6% rise in January, looking like a bit of involuntary inventory accumulation.
Meantime, initial jobless claims rose by 3,000 to 324,000 in the week ending Mar. 19. This was against an expected dip. The data is consistent with a steady labor market but the recent round of M&A deals is likely to lead to related cost cutting, including layoffs, Informa says.
Thursda two days after the Federal Reserve boosted the federal funds rate by a quarter-percentage point to 2.75% as expected but also warned that "pressures on inflation have picked up in recent months".
Among the upbeat corporate reports Thursday, diversified conglomerate GE raised its first-quarter earnings forecast, crediting strong performance across its businesses. The Wall Street Journal also reported that GE is mulling an offer to hire closely held NIB Capital Bank, a Dutch commercial-finance and investment bank valued at more than $3 billion, reported citing people familiar with the situation.
Defense contractor Northrop Grumman (NOC ) raised its annual profit target and raised its quarterly divident 13%.
Darden Restaurants (DRI ), which operates the Red Lobster and Olive Garden chains, also increased its earnings target for the fiscal year and posted 20% higher third quarter net income thanks to double-digit sales growth, generated by same-store sales increases and new-store traffic.
Digital animation studio Pixar's (PIXR ) board approved a 2-for-1 split stock split for April and authorized a proportional increase in the number of Pixar common shares to 200 million from 100 million.
And Internet media company Yahoo's (YHOO ) board approved a $3 billion stock buyback program over the next five years.
But oil prices rose slightly on word of a refinery explosion in Texas. Crude was up 93 cents on the NYMEX futures to $54.84 per barrel.
In other stocks news, struggling cable operator Adelphia Communications is near a $725 million settlement with the Government over claims stemming from its corporate looting and accounting scandal, reported the Wall Street Journal, citing people familiar with the matter.
ConAgra Foods (CAG ), which makes packaged foods such as Butterball turkeys, said its quarterly operating profit was flat as costs for ingredients like pork rose. The company also warned it would restate results for fiscal years 2003 and 2004 due to income tax errors.
In a another economics report, new home sales rose to a 1.226 million annualized pace in March -- the second highest ever--up 9.4% from 1.121 million pace in January (revised). The readings are well above expectations of 1.116 million, as improving labor conditions and higher mortgage rates spur prospective buyers to enter the market before rates turn even higher (even though mortgage applications have been easing).
Treasuries closed mixed in price Thursday with the yield on the 10-year note rising to 4.59%. The uptick following the rise in jobless claims and fall in durables data ran out of steam quickly, Informa said. Record new home sales was the proverbial "last straw".
European stock markets closed higher on Thursday. London's Financial Times-Stock Exchange 100 index was up 12.10 points, or 0.25%, at 4,922.50 on short covering before a 4-day holiday weekend. A Bank of England official said there appears to be good reason to believe the more recent slowdown in consumer spending might only be temporary.
Germany's DAX index gained 26.40 points, or 0.61%, to 4,343.60 even though March consumer prices rose more than expected due to higher oil prices. TUI was lower on a Reuters report that Spanish investors sold part of their stake in the company.
In Paris, the CAC 40 index added 45.90 points, or 1.14%, to 4,078.31 even though INSEE believes French economic growth will slow in the 2005 first half.
Asian markets closed mixed. In Japan, the Nikkei index added 6.85 points, or 0.06%, to 11,745.97. On the upside, Nippon Broadcasting System shot up 16% on speculation that Internet company Livedoor is buying the its shares. TDK was up 0.8%, bolstered by the company's promise to raise its dividend payment.
In Hong Kong, the Hang Seng index dipped 6.51 points, or 0.05%, to close at 13,597.10. China Merchant Holding lost 2.2% after the company said that it has bought a 17.5% stake in Shekou Container Terminals from COSCO Pacific. But Lenovo jumped 4.1% on news that it is in advanced talks with Texas Pacific Group, General Atlantic and Newbridge Capital, which plan to put up a total of around US$350 million to take a minority stake in Lenovo.