Blue Chips Finish Higher

The market weathered a surge in crude oil prices above $58 per barrel

Blue-chip stock indexes finished higher Friday, reaching their highest closing levels since March, while the Nasdaq was little changed. The market weathered a surge in crude oil prices above $58 per barrel. The quarterly expiration of futures and options contracts this morning was driving some activity and pushing volume to unusually high levels, according to Standard & Poor's MarketScope.

The Dow Jones industrial average rose 44.42 points, or 0.42%, to 10,623.07. The broader Standard & Poor's 500 index gained 6.00 points, or 0.50%, to 1,216.96. The tech-heavy Nasdaq composite added 0.96 points, or 0.05%, to 2,090.11.

Looking ahead to next week, the economic calendar is light. Wednesday brings a report on existing home sales for may, which are expected to rise to an annualized pace of 7.04 million. On Thursday, investors will see two May reports: durable goods orders for May, which are expected to rise 2.3%, and new home sales, which are expected to rise to a 1.33 million annualized rate.

The corporate earnings calendar is also light next week. Among the highlights: Jabil Circuit (JBL ) and Kroger (KR ) on Tuesday, Morgan Stanley (MWD ) and Bed Bath & Beyond (BBBY ) on Wednesday, and FedEx (FDX ) and Family Dollar (



Also, look for chatter to pick up in the next two weeks about the June 30 FOMC's policy statement, according to Action Economics.

Among sectors on the move Friday, recent strength in commodity prices was boosting basic materials stocks. Homebuilders were rising on solid quarterly results from ~KB Home (KBH ) and a brokerage upgrade of six names in the group.

In economic news Friday, the first-quarter U.S. current account trade deficit rose to a wider-than-expected $195.1 billion, a new record, from $188.4 billion in the fourth quarter, which was revised from the original reading of $187.9 billion. The data could put some downward pressure on the dollar and Treasury prices, according to Action Ecnomics, although the market does not usually respond much to quarterly data.

The preliminary reading of the University of Michigan index showed that U.S. consumer sentiment rose more than expected in June. The index came in at 94.8, up from the 86.9 reading in May.

The price of July West Texas Intermediate crude oil spurted $1.89 to a 22-year high of $58.47 per barrel on massive hedge fund speculation, reports Standard & Poor's Marketscope. Buying was fueled by eports that the U.S. closed its Nigerian embassy and a consulate because of a security incident. In corporate news, Bank of America (BAC ) announced Friday it agreed to buy a 9% stake in the government owned China Construction Bank for $3 billion. The deal marks the biggest single purchase of stock by a foreign firm in the Chinese banking sector.

Morgan Stanley (MWD ) is reconsidering spinning off its Discover credit card business, partly because of concerns that it may need a bigger cash infusion to operate independently than originally expected, according to a report in the Wall Street Journal.

Consumer-electronics retailer Circuit City Stores (CC ) reported a wider-than-expected first-quarter loss of $13.1 million, much of it due to costs related to a legal battle with RadioShack Corp. in Canada.

In earnings news Friday, KB Home reported second-quarter earnings per share of $2.06, vs. $1.20 one year earlier, on a 36% revenue rise. KB raised its fiscal 2005 EPS guidance to $9.00. The shares moved solidly higher.

After Thursday's close, Adobe Systems (ADBE ) reported that its second-quarter profits rose 37%, better than expected, to $149.8 million or 29 cents a share. However, the software maker gave cautious third-quarter guidance forecasting earnings of 25 to 27 cents a share, and its shares fell 5% Friday.

Treasury Market

Treasuries finished mixed in price on Friday, with the yield on the 10-year note ending slightly higher at 4.07%. The record current account surplus was initially shrugged off, though the surprising jump in Michigan sentiment drove yields briefly higher before they closed out the session in the middle of the range, reports Action Economics.

World Markets

European markets finished higher Friday. London's FTSE 100 added 32.60 points, or 0.65%, to 5,077.6, within hailing distance of a three-year high. Shell Transport and BP both gained on the rise in oil prices.

In Germany, the DAX index rose 24.70, or 0.54%, to 4,604.57, as eurozone Industrial Production rose in April for the first time since January. Also, the German producer price index was unchanged in May after rising 0.7% in April.

In Paris, the CAC 40 gained 35.76 points, or 0.85%, to 4,220.91. Liquor group Pernod Ricard was higher after winning the battle to buy British group Allied Domecq after rival Constellation Brands backed out. Aerospace giant EADS was also higher after its Airbus unit secured 200 orders at the Paris Air Show, beating Boeing.

Asian markets closed higher Friday. Japan's Nikkei 225 rose for the sixth straight day, gaining 97.65, or 0.86%, to 11,514.03. Gains on Wall Street helped lift sentiment, and higher oil and commodity prices boosted basic materials and energy stocks.

Hong Kong's Hang Seng added 78.50 points, or 0.57%, to close at 13,912.0, as the government announced the unemployment rate dropped to a three-year low of 5.7%.

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