Stocks Finish Mixed
Major U.S. stock indexes ended mixed Thursday, and a rumor that Dow component IBM Corp. (IBM ) would announce lowered guidance weighed on blue chips.
Many traders were sidelined ahead of Federal Reserve's chief Greenspan's speech Friday on the health of the U.S. economy. There was some speculation that the Fed chief would comment on stock valuations in his speech to the Bay Area Council in San Francisco on Friday. Greenspan has had little to say on the subject since his famous "irrational exuberance" comment sent stock prices plunging in December 1996.
Slower-growth blue chips fell. Ford (F ) traded lower as UBS Warburg downgraded the stock to reduce.
Meanwhile, Enron (ENE ) auditor Arthur Andersen said employees destroyed a "significant" number of documents sought by law-enforcement officials. The news came as the U.S. Justice Department began investigating the failed energy trader for criminal charges. President Bush called for the U.S. Treasury to review pension-plan practices in the wake the Enron collapse. The plunge in its share price cost many employees their life savings after the company filed the biggest bankruptcy claim in U.S. history.
Technology shares ended close to flat but in positive territory, on hopes an economic recovery is under way and that tech firms will show the fastest growth. Microsoft (MSFT ) and Verizon Communications (VZ ) made solid gains.
"We saw a lot of profit-taking today and new earnings warnings kept buyers away. Energy stocks and techs recovered somewhat, but transports and defensive stocks have been lower," says Stephen Carl, a principal at the Williams Capital Group.
Initial jobless claims for the week ended Jan. 5 fell a more-than-expected 56,000 to 395,000, but the news did little to boost confidence of a stronger labor market.
Economic data on tap for Friday is producers' price index, a key measure of real growth in domestic output. Standard & Poor's MMS expects the December overall-PPI to drop 0.3% and the core to be flat on the month -- consistent with weak pricing pressure.
The Dow Jones industrial average fell 26.23 points, or 0.26%, to 10,067.86. The tech-heavy Nasdaq composite index shed 2.35 points, or 0.11%, to 2,047.24. The broader S&P 500 index dropped 1.41 points, or 0.12%, to 1,155.55.
Treasuries finished higher as a wave of short-covering from a variety of sources lifted prices -- a bit surprising given the resilience of the equity market and the fact that Greenspan will be talking about the economy on Friday.
European markets ended lower. In London, the Financial Times-Stock Exchange 100 index fell 37.80 points, or 0.72%, to 5,190.70 higher as the Bank of England left interest rates unchanged. In France, the CAC 40 dropped 71.49 points, or 1.56%, to 4,515.12. In Germany, the DAX Index slid 60.10 points, or 1.14%, to 5,228.11.
In Asia, the markets ended with losses. Japan's Nikkei lost 125.55 points, or 1.18%, to 10,538.43 down on weak sentiment, led by banks. In Hong Kong, the market dropped 185.65 points, or 1.61%, to 11,256.07.
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