Stocks finished lower as Treasury yields pushed higher on Friday, following a strong Chicago purchasing managers' index number and a second-quarter U.S. gross domestic product (GDP) that came in close to market expectations.
The Dow Jones industrial average fell 64.64 points, or 0.60%, to 10,640.91. The broader Standard & Poor's 500 index was down 9.54 points, or 0.77%, to 1,234.18. The tech-heavy Nasdaq composite lost 13.61 points, or 0.62%, moving to 2,184.83.
The tepid reaction in the Treasury market to China's yuan revaluation "may have lulled some stock market participants into a cozy expectation that long-term yields would not rise from recent levels," says Standard & Poor's MarketScope.
Market sentiment may have also been hurt by a fresh rise in oil prices. Crude settled up 63 cents to $60.57 a barrel in New York trading, after a fire damaged BP's Texas City refinery on Thursday.
In Friday's economic news, the U.S. GDP figure was revised down to 3.4% from 3.8%, slightly lower than expected. Inventories subtracted 2.32% from growth, while net exports added 1.57%. Consumer spending rose 3.3%, vs. the 3.6% in the first quarter. This points to a "Goldilocks" economy, observes Action Economics, and should be friendly to the Treasury market.
Meanwhile, a key regional gauge of the manufacturing sector pointed to solid growth. The Chicago purchasing managers' index rose to a higher than expected 63.5 level from 53.6 in June. The production index surged to 70.5 from 57.8, its best showing since March and better than the 6-month average of 66.3. New orders rose to 69.6 from 56.5 in June.
The final University of Michigan consumer sentiment data for July was also released. The index held steady at 96.5, in line with market forecasts.
Fast-food chain Wendy's (WEN ) posted earnings of 61 cents a share, vs. 62 cents in the second-quarter a year ago. Wendy's lowered its 2005 outlook to between $2.20 and 2.26 a share. The company said it planned a $1 billion stock buyback, raised its annual dividend by 25%, and that it plans to sell 15-18% of its Tim Hortons business in an IPO at the end of the first quarter.
Symantec (SYMC ) reported earnings of 27 cents a share in the second quarter, vs. 16 cents a share during the same period a year ago, on a 26% rise in revenue.
Netgear (NTGR ) saw second-quarter earnings of 25 cents a share, vs. 15 cents per share last year, on a 22% rise in revenue. The company added that it predicts it will collect between $113 million and $118 million in revenue in the 3rd quarter. Standard & Poor's reiterated its strong buy rating on the stock.
Up ahead on the economic calendar next week is the July manufacturing number from the Institute of Supply Management on Monday, the ISM's non-manufacturing number on Wednesday, and the July Employment report next Friday.
Prominent names on next week's corporate earnings calendar include Tyco International (TYC ), Comcast (CMCSA ), CIGNA (CI ), Time Warner (TWX ), Gillette G, and Viacom (VIA ).
Treasury yields pushed higher in the wake of the GDP data, and the stronger-than-expected Chicago PMI. The 10-year note finished higher at 4.28%.
European stock markets finished mixed Friday. London's FTSE 100 index closed up 12.00 points, or 0.23%, to 5,282.30.
Germany's DAX index lost 6.00 points, or 0.12%, to 4,886.50.
In Paris, the CAC 40 index dropped 10.52 points, or 0.24%, to 4,451.74.
Asian markets finished higher Friday. In Japan, the Nikkei index closed up 41.29 points, or 0.35%, at 11,899.60.
In Hong Kong, the Hang Seng index gained 67.66 points, or 0.46%, moving to 14,880.98.