Greenspan and Earnings to Take Center Stage
Stocks ended modestly higher Friday, as investors picked up some beaten-down stocks such as IBM (IBM ). The government said its probe of IBM, a Dow component, closed without action. But the buying mood was restrained by the latest report of violence in the Middle East, along with some uninspiring economic reports.
The Dow Jones industrial average closed up 14.74 points, or 0.14%, to 10,190.82. The Nasdaq Composite index added 30.97 points, or 1.80%, to 1,756.21. And the broader Standard & Poor's 500 index, meanwhile, was up 7.14 points, or 0.65%, to 1,110.83.
Next week, all eyes will be on Federal Reserve Chairman Alan Greenspan Wednesday when he speaks to the Joint Economic Committee. Greenspan is expected to generally follow his Humphrey-Hawkins script where he indicated the economic expansion is "well underway" but that the "dimensions of future growth remain uncertain." While the market shouldn't have any problem with the expansion part, how he characterizes future growth path will taken as a cue on the Fed's policy bias, says Standard & Poor's MMS.
In addition, there are a number of economic reports to watch. The list includes business inventories, CPI, housing starts, industrial production, capacity utilization, jobless claims, leading indicators, and the Philly Fed. The mix of data are likely to be consistent with recent releases that have been softer than expected, helping moderate expectations on the economy's growth path, says Standard & Poor's MMS.
In addition, a slew of earnings reports are set to be released next week. Texas Instruments (TXN ), Caterpillar (CAT ), Coca-Cola (KO ), and Microsoft (MSFT ) are among the many companies scheduled to report quarterly results.
On Friday, tech stocks led the way higher. Shares of IBM closed up more than 1%, after skidding 5% Thursday on rumors the Securities and Exchange Commission was investigating the company. But after the closing bell, the SEC said it had opened and shut a preliminary inquiry into IBM, the world's leading maker of computers.
However, energy stocks skidded as oil prices, which had been climbing in past weeks on the intensifying Mideast conflict, fell to roughly $23 a barrel after Venezuelan President Hugo Chavez agreed to resign under pressure from the military. The move is expected to end a strike at the nation's state oil company that cut exports this week.
Meanwhile, shares of major U.S. airlines rallied after Continental Airlines (CAL ) raised air fares and after oil prices, one of the airlines' biggest costs, dropped sharply, according to wire reports. Analysts note the increase was a sign that revenues may be starting to improve more dramatically.
One notable highflyer was the IPO of JetBlue Airways (JBLU ). The shares of the discount airline company rose to $45 from its offering price of $27, making it the best IPO performance in about a year.
In economic news Friday, U.S. consumers kept spending in March but at only a modest rate, the Commerce Department said. Retail sales rose 0.2% in March to $297.34 billion, matching a downwardly revised 0.2% gain in February. Previously, February sales had been had been reported as up 0.3%. March sales excluding autos were up a slightly stronger 0.4%, while February purchases outside the auto sector were revised to unchanged from a 0.2% gain.
Meanwhile, the Labor Department said wholesale prices surged in March, pushed up by energy costs that raced to their highest levels in almost two years. Producer prices rose 1.0%, the highest since a 1.1% increase in January, 2001. The jump was higher than the 0.7% expected by analysts and compared to a 0.2% increase the previous month. Excluding volatile food and energy prices, the PPI index rose just 0.1%, meeting expectations.
Additionally, the University of Michigan's preliminary consumer sentiment index for April slipped to 94.4 from 95.7 in March, bucking analysts' forecasts for a rise to 96.5 as the economy has recovered from the blow of the September 11 attacks, according to wire reports.
U.S. Treasuries closed higher, sending yields lower, as traders digested the latest economic data.
European markets finished higher, even though buying was tempered by the latest bus bombing in Jerusalem. In London, the Financial Times-Stock Exchange 100 index was up 23.60 points, or 0.46%, to 5,161. In France, the CAC 40 added 26.75 points, or 0.60%, to 4,468.29. And in Germany, the DAX Index gained 23.35 points, or 0.45%, to 5,186.31, after a new report showed German Retail Sales fell 1.5% in February.
In Asia, the markets ended lower. The Nikkei was plunged 184.29 points, or 1.65%, to 10,962.98, dragged down by telecom shares. In Hong Kong, the market lost 34.43 points, or 0.32%, to 10,710.48.