Stocks Finish Mixed

Next week brings economic updates on inventories, inflation at the wholesale level, and retail sales

Stocks finished Friday mixed, with technology shares in the red and blue-chips posting modest gains. Investors mulled two negative developmentss: A government report showed much weaker-than-expected jobs growth in February while a Intel (INTC ) lowered its guidance.

The Dow Jones industrial average finished up 8 points, or 0.08%, to 10,596. The broader Standard & Poor's 500-stock index was up 2.04 points, or 0.18%, at 1,156.91. The tech-heavy Nasdaq composite index fell 7.48 points, or 0.36%, to 2,047.63.

Late in Friday's session, a jury found lifestyle entrepreneur Martha Stewart guilty of lying to investigators about her sale of stock in biotech company ImClone (IMCL ). The charges include one count of conspiracy, two counts of making false statements and one count of obstruction of agency proceedings.

Shares of Martha Stewart Living Omnimedia (MSO ) had been higher before trading was halted prior to the decision. After reopening around 3:30, the stock plunged 22%.

Intel lost 2% amid heavy trading volume. After Thursday's close, in its mid-quarter update, Intel cut the midpoint of its quarterly revenue forecast by $100 million citing oversupply of computer chips to Asia that hurt sales in that region.

Before the start of trading Friday, the Labor Department provided a disappointing read on jobs. The February employment report showed the economy adding 21,000 non-farm jobs in February, up from a revised 97,000 in January. The January figure was first reported as 112,000. The unemployment rate remained at 5.6%. Economists on average had expected 135,000 new jobs for the month. Average hours worked per week were unchanged, with average weekly wages rising by 1.6%.

"I'm really struck," says Boston-based Lincoln Anderson, chief investment officer at LPL Financial Services, noting that the recent ISM manufacturing survey showed a strong 56.3 reading for jobs in February and led him to expect more than 150,000 in new job growth for the month.

"There will be a balance of those who think it's negative for consumer spending and people viewing it as an increase in corporate profits," says Anderson. "The [latter] is probably more important right now."

The low wages and meager job growth do offer a "silver lining" for gross domestic product expectations, Anderson says. "My guess is that GDP will grow 4% to 5% in the first quarter," driven by continued productivity gains.

"It is certainly bad news for the Bush Administration, as John Kerry will no doubt hammer home the disappointment, repeating everywhere that George W. Bush is the first president since Herbert Hoover and the Great Depression to preside over a net job loss (of 2.3 million jobs)," writes Sherry Cooper, Executive Vice-President and Global Economic Strategist at BMO Financial Group.

Adds UBS economist Maury Harris: "Hiring is barely positive and not showing much momentum. Employers continue to rely on productivity to expand." On a somewhat bright note, manufacturing jobs fell by 3,000, the best performance since July, 2000. "Job losses in this sector are slowly declining," he says.

In company news Friday, medical device maker Boston Scientific (BSX ) said it won FDA approval to sell its Taxus drug-coated stent, becoming the second company after Johnson & Johnson (JNJ ) to win such approval.

Fast food giant McDonald's (MCD ) said sales at restaurants open more than a year rose 13.9% in February, the 10th consecutive monthly gain, as it continues to improve its busness in the United States.

Boeing (BA ), a Dow component, warned it could take a $310 million charge if the U.S. government does not give it a contract to lease refueling tankers.

TiVo (TIVO ) posted a narrower quarterly loss, citing growing demand for subscriptions to its television recording service. It expects to double its customer base this year.

The earnings calendar next week includes updates from Jo-Ann (JAS ), Giant Industries (GI ), Albertsons (ABS ), Ann Taylor (ANN ), Talbots (TLB ), Conseco (CNO ), El Paso (EP ) and Shire Pharmaceuticals (SHPGY )

In economic updates next week, investors will get the latest on retail sales, import and export activity, wholesale inventories and sales, producer price index, business invetories, initial jobless claims and the current account deficit.

Treasury Market

Treasuries finished with strong gains following the disappointing employment data, which are being interpreted as evidence that the Federal Reserve will not increase interest rates to curb inflation any time soon. Says LPL Financial's Anderson: "This takes away any risk of the Fed tightening before the election since employment growth and the traditional inflation drivers just aren't there."

The dollar fell sharply in response to news of a weak jobs recovery.

World Markets

European stock markets finished on a down note, though up from their worst levels, following the shortfall in U.S. jobs growth. London's Financial Times-Stock Exchange 100 index fell 12 points, or 0.26%, to 4.547.10.

Germany's DAX index shed 7.64 points, or 0.18%, to 4,126.14. In Paris, the CAC 40 declined 15.83 points, or 0.42%, to 3,761.11.

In Asia, markets finished up overnight, on optimism for good jobs figures in the U.S. The Nikkei 225 index gained 135.5 points, or 1.19%, to 11,537.29. In Hong Kong, the Hang Seng index ticked up 3.20 points, or 0.02%, to 13,454.76.

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