Stocks cap strong week with mixed finish
NEW YORK — Investors are betting that the stock market has restarted its spring rally.
Stocks ended little changed Friday but held onto an enormous gain for the week. Investors are looking to another flood of corporate earnings reports next week to provide more signs that the economy is healing.
The Dow Jones industrials and the Standard & Poor's 500 index posted their best weekly performance since early March, when the market's spring rally began. Major stock indexes rose about 7 percent for the week.
"The earnings are better than expected and the economic news is not horrifically bad," said Jeff Buetow, managing partner at Innealta Portfolio Advisors. "I think people want the market to go up."
Solid results from Goldman Sachs Group Inc. and Intel Corp. spurred buying early in the week. But not all the results Friday were strong, so the market barely budged.
Bank of America Corp. and Citigroup Inc. became the latest banks to report big profits but also weakness in their loan portfolios. General Electric Co. beat earnings forecasts, but its revenue came up short.
"The important thing is these earnings results, while not all entirely positive, are beginning to show some signs of stabilization," said Tom Kersting, an analyst at Edward Jones.
The week's upward move has, at least for now, halted a slide that began in mid-June as investors worried the 40 percent jump in stocks this spring was overdone. Analysts said it was a healthy sign that the market was taking a breather on Friday.
"I think it's very constructive that we're taking a pause here and not heading back down," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research.
Sparks said it's too early to say whether this week will be representative of the rest of earnings season. Next week's large batch of reports includes Dow components Caterpillar Inc., DuPont and Merck & Co.
The Dow Jones industrials rose 32.12, or 0.4 percent, to 8,743.94. The blue chips rose 7.3 percent for the week, the first weekly gain after a month of losses. It was the best percentage gain since the week ended March 13 and the 597-point jump was the biggest point gain since late November.
On Friday, the broader Standard & Poor's 500 index slipped 0.36, or less than 0.1 percent, to 940.38, while the Nasdaq composite index rose 1.58, or 0.1 percent, to 1,886.61.
The number of stocks that fell narrowly outpaced those that rose on the New York Stock Exchange, where consolidated trading volume came to 5 billion shares, flat with Thursday.
Financial stocks mostly fell, weighing on the broader market. Investors have been encouraged by strong profits from large banks, but there are still signs that the recession's grip hasn't eased as much as hoped, such as higher loan defaults.
BofA, which has struggled more than some of its peers from loan losses, beat Wall Street estimates just as Goldman Sachs and JPMorgan Chase & Co. did earlier in the week. However its profit fell from a year earlier as losses from delinquent loans continued to climb. BofA fell 28 cents, or 2.1 percent, to $12.89.
Citigroup, another troubled bank, surprised Wall Street with a $3 billion profit instead of the big loss analysts had expected, but results were boosted by the sale of a majority stake in its Smith Barney brokerage. Its shares fell a penny to $3.02.
One exception was CIT Group Inc., whose shares jumped 29 cents to 70 cents, on speculation that the troubled lender might be able to avoid bankruptcy. Its shares had tumbled 75 percent on Thursday after negotiations with federal regulators about a possible rescue fell through.
GE's shares dropped 6 percent after the conglomerate said its earnings fell 49 percent on losses at its financial unit and weakness in industrial businesses. The profits topped forecasts, but revenue came in $3 billion below estimates. The stock lost 75 cents to $11.65.
The reports followed mixed results from Google Inc. and IBM Corp. late Thursday.
Ken Kamen, president of Mercadien Asset Management in Hamilton, N.J., warned that investors' higher expectations could make it harder for the next batch of corporate results to impress investors.
"A lot of exuberance is being figured into the earnings coming out in the next couple of weeks," he said.
