Stocks Drift on Microsoft, Data
Stocks finished mixed Friday, following new economic data and disappointing earnings guidance from tech bellwether Microsoft (MSFT). Financial shares rose on sentiment the Federal Reserve could pause its interest-rate hikes, while volume was trending lower, says Standard & Poor's MarketScope.
The Dow Jones industrial average slipped 15.37 points, or 0.14%, to 11,367.14, still turning in a gain of 2.3% for the month of April. The broader Standard & Poor's 500 index edged higher 0.89 points, or 0.07%, to 1,310.61, a monthly increase of 1.2%. The tech-heavy Nasdaq composite was down 22.38 points, or 0.95%, to 2,322.57, declining 0.7% on the month.
Fresh economic readings were in focus Friday. First-quarter gross domestic product (GDP) rose 4.8%, close to expectations. The employment cost index (ECI) rose just 0.6% in the first quarter, well below forecasts, says Action Economics.
After the opening bell, the University of Michigan's final April reading for consumer sentiment was revised lower to 87.4, slightly softer than expected. The Chicago PMI manufacturing index fell to 57.2 in April from 60.4 in March.
Some analysts say the data show an economy poised for future growth. "Growth was lower than expectations because of inventories -- which will need to be rebuilt -- while moderating employment costs will make it less costly for firms to hire additional workers," says Lehman Brothers economist Drew Matus. "The still-strong level of wage and salary should buoy consumption."
Meanwhile, the ECI number dovetails neatly with Fed Chairman Ben Bernanke's recent hints at potential pause in the tightening cycle, others say. "To me it really shows that labor costs are under control," says Gary Wolfer, senior portfolio manager at Univest Wealth Management & Trust.
The flow of data is set to continue next week, when the calendar includes reports on April employment, April national business activity, first-quarter productivity and March construction outlays.
Investors were also digesting earnings news Friday. Software giant Microsoft (MSFT) was lower in afternoon trading after the company posted a lower-than-expected first-quarter profit and a disappointing fiscal-year outlook. Citigroup cut its price estimate on shares by 10%.
Computer maker Gateway (GTW) was lower after company said its first-quarter loss widened to 3 cents a share from 1 cent after legal costs and a drop in sales to businesses offset an overall gain in PC orders. On the positive side, Chevron (CVX) was up after the oil company posted a 49% higher first-quarter profit of $4 billion.
Financial conglomerate Citigroup (C) rose after Piper Jaffray upgraded the stock from market perform to outperform. J.P. Morgan Chase (JPM) also moved higher.
Companies posting earnings next week include Eastman Kodak (EK), Procter & Gamble (PG), Starbucks (SBUX) and Verizon (VZ).
In the energy markets Thursday, June West Texas Intermediate crude oil futures closed up 91 cents at $71.88 amid Iran worries.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index fell 36.9 points, or 0.61%, to 6,023.1. Germany's DAX index dropped 57.85 points, or 0.95%, to 6,009.89. In Paris, the CAC 40 index slipped 25.15 points, or 0.48%, to 5,188.4.
Asian markets finished lower. Japan's Nikkei 225 index fell 208.31 points, or 1.22%, to 16,906.23. In Hong Kong, the Hang Seng index slid 81.55 points, or 0.49%, to 16,661.3. Korea's Kospi index tumbled 32.8 points, or 2.26%, to 1,419.73.
Prices for 10-year Treasury notes inched higher to 95-22/32 with a yield of 5.07%, while 30-year bonds were little changed at 89-28/32 for a yield of 5.17%.
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