Stocks were mixed Friday after a measure of consumer sentiment hit the lowest level since 1982. Traders also closely watched earnings season, as results from American Express (AXP) impressed investors but Microsoft's (MSFT) profits fell short.
Microsoft posted earnings of 47 cents per share, vs. 50 cents a year ago. Revenue rose slightly. The software maker expects earnings of $2.13 to $2.19 per share next year.
American Express reported earnings of 84 cents per share, vs. 90 cents. Revenue, up 11%, was stronger than expected, with international sales making up for weakness in the U.S., the company said.
The final reading for the consumer sentiment index was 62.6 in April, down from 69.5 in March. "The recent acceleration in the loss in confidence indicates a longer and potentially deeper recession," said Richard Curtin, director of the Reuters/University of Michigan Surveys of Consumers. Consumers also expect much higher prices, with the survey's inflation gauge at 4.8%.
"Historically, the most accurate real-time signal of recession has been consumer confidence," says Ryan Sweet of Moody's Economy.com. "This level of confidence is not only consistent with a recession, it is beginning to suggest a severe recession."
Still, blue chip stocks managed to end higher Friday. The Dow Jones industrial average rose 42.91 points, or 0.33%, to 12,891.86. And the broader S&P 500 was up 9.02 points, or 0.65%, to 1,397.84. But the tech-heavy Nasdaq composite index fell 5.99 points, or 0.25%, to 2,422.93.
On the New York Stock Exchange, 19 stocks moved higher for every 12 in negative territory. On the Nasdaq, the ratio was 16 to 12 positive.
Oil prices jumped Friday on news that a U.S. ship fired warning shots in the Persian Gulf. On the NYMEX, June crude oil was up $2.44 to $118.50 per barrel.
Next week, earnings season continues, with 125 members of the S&P 500 reporting results, including Humana (HUM), Archer Daniels Midland (ADM), U.S. Steel (X), General Motors (GM) and Chevron (CVX).
By the end of the week, 75% of the S&P 500 will have posted first quarter earnings. At this point in the earnings season, according to Thomson Reuters, S&P 500 earnings are expected to fall 14.1% from a year ago.
Another major news item next week is the meeting of the Federal Reserve on Tuesday and Wednesday. The Fed is expected to cut interest rates, but many Fed-watchers say it could be the last rate adjustment for a while.
Important economic data next week include a look at first quarter gross domestic product on Wednesday; data on construction spending, auto sales and personal income on Thursday; and a closely watched April jobs report next Friday.
Among other stocks in the news Friday, Altria Group (MO) said it earned 29 cents per share last quarter, down from 33 cents a year ago as the company took charges related to its spin-off of Philip Morris International. Revenue rose 2.8%.
Goodyear Tire & Rubber (GT) posted earnings of 60 cents per share, vs. a loss of 61 cents a year ago. Sales rose 10%.
Baidu.com (BIDU), the Chinese Internet company, posted earnings of 68 cents per share, vs. 67 cents a year ago, on sharply higher revenue of $81.9 million.
ITT Corp. (ITT) posted earnings of 93 cents per share, vs. 74 cents a year ago, as revenue rose 25%. The company raised its 2008 profit forecast.
MEMC Electronic Materials (WFR) reported earnings of 84 cents per share, vs. 58 cents a year ago, as sales were up 14%. The company said demand from customers for semiconductor applications is a bit weaker than typical.
Devry (DV) reported earnings of 53 cents per share, vs. 32 cents a year ago. Revenue rose 18%, and new undergraduate enrollment was up 12.1%.
Downey Financial (DSL) said it would slash its quarterly dividend, from 12 cents per share to 1 cent.
Major European indexes were higher Friday. In London, the FTSE 100 index rose 0.67% to 6,091.40. Paris' CAC 40 index gained 0.99% to 4,978.21, and Germany's DAX index rose 1.1% to 6,896.58.
In Asia, Japan's Nikkei 225 was up 2.38% to 13,863.47, while Hong Kong's Hang Seng index fell 0.64% to 25,516.78.
Treasury prices fell on Friday. The ten-year note fell 10/32 to 96-00/32 for a yield of 3.87%, and the 30-year bond tumbled 24/32 to 96-16/32 for a yield of 4.59%.