Stocks edged lower Friday. The quarterly expiration of futures and options, as well as the rebalancing of the S&P 500 and NASDAQ 100 indexes, drove volume significantly higher, says Standard & Poor's MarketScope.
The Dow Jones industrial average fell 6.08 points, or 0.06%, to 10,875.59. The broader Standard & Poor's 500 index was down 3.62 points, or 0.28%, to 1,267.32. The tech-heavy Nasdaq composite index lost 8.15 points, or 0.36%, to 2,252.48.
A drop in January West Texas Intermediate crude oil -- down $1.93 to $58.06 a barrel -- sent energy shares down broadly but did not aid the broader market, says Standard & Poor's MarketScope. New long term reports from the National Weather Service forecast warmer than normal temperatures for much of the U.S. from January to March, and this appears to have been behind price weakness on Friday, says Action Economics.
The economic calendar is relatively light next week. The datea that will be watched will be the housing data, with the markets looking for any cracks in this sector, says Action Economics. Housing starts on Tuesday are forecast to rebound to a 2.0 million units pace.
The producer price index (PPI), also on Tuesday, should look similar to CPI, with a 0.5% drop in the headline and a 0.2% rise in the core, says Action Economics.
Third-quarter GDP, coming out Wednesday, should stay at a 4.3% rate of growth. On Friday, durable orders, new home sales, and the final consumer sentiment reading will be out.
The Fed's Lacker also speaks on a couple of occasions. He's a known hawk and votes next year. Also, the Treasury announces 2-year notes Thursday.
In economic news Friday, the third-quarter current account deficit narrowed unexpectedly to $195.8 billion from $197.8 billion in the second quarter. There was little impact on the financial markets, though.
In earnings news, Oracle (ORCL ) posted second-quarter earnings per share of 15 cents, vs. 16 cents a year ago (GAAP basis), despite a 19% revenue rise. The software maker says it remains on track to meet or exceed its goal of 20% EPS growth for fiscal year 2006. Merril Lynch reportedly upgraded the stock to buy. Still, the stock fell.
Adobe Systems (ADBE ) posted better-than-expected fourth-quarter EPS of 31 cents, vs. 23 cents a year ago (GAAP), on a 19% revenue rise. It sees 13-16 cents first-quarter EPS. The company plans to cut 10% of its workforce. It announced the resignation of Murray Demo, executive vice president, finance, and CFO, for personal reasons. The shares jumped.
Google (GOOG ) and Time Warner's (TWX ) AOL unit are in exclusive talks over deal that would have Google pay $1 billion for a 5% stake in AOL, deepening their advertising partnership, according to The Wall Street Journal. Google and Time Warner shares climbed on the news.
In other deal news, Albertson's (ABS ) supermarket chain will be sold for $9.6 billion to an investor group led by Cerberus Capital.
Animas (PUMP ) agreed to be acquired by Johnson & Johnson (JNJ ) in a $518 million deal, or $24.50 cash for each Animas share.
General Motors (GM ) CEO Wagoner delivered an upbeat 2006 assessment of the auto-maker's sales prospects on a brand new line of SUVs and trucks.
In Europe, London's FTSE-100, Germany's DAX, and France's CAC-40 indexes finished higher.
In Asia, Japan's Nikkei index fell 81.37 points (0.53%) to 15,173.07 as yen strength continue to raise concern of an adverse impact on exporters' earnings. A strong yen makes Japanese products less attractively priced in foreign markets, says Standard & Poor's MarketScope.
In Hong Kong, the Hang Seng index lost 29.21 points (0.19%) to 15,029.81, reflecting a cautious mood ahead of the weekend and following weakness on Wall Street Thursday. A solid debut for Cheung Kong Holdings' Prosperity REIT provided some underlying support for the market, says Standard & Poor's MarketScope.
Treasury prices rose, sending the 10-year note yield down to 4.45%.
Action Economics notes there will be more changes at the Fed next year, as Philly Fed President Santomero announced he will step down effective March 31. He was at the Fed for nearly six years, a will be rotating out of voting status. There will be several new faces at the Fed next year, led by a new chairman, with Santomero's replacement, and two governorships that still need to be filled, says Action Economics.