advertisement
Article Tools
| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.661900 |
| Euro to US Dollar | 1.485000 |
| Japanese Yen to US Dollar | 0.011100 |
| Canadian Dollar to US Dollar | 0.930600 |
Stocks rallied on Friday, withstanding the pressure of higher interest rates and oil prices and giving investors a reason to look forward to the second-quarter earnings season.
The nation's biggest companies begin reporting earnings after Monday's market close, starting with aluminum giant Alcoa (AA, news, msgs).
The Dow Jones industrials finished Friday up nearly 46 points to 13,611.68, the blue-chip index's first close above 13,600 since June 13. The Standard & Poor's 500 Index hit 1,530.44, up 5 points on the day and nine points below its all-time high of 1,539.18 set on June 4.
The Nasdaq Composite, meanwhile, jumped 9.9 points to 2,666.51, its best close since finishing at 2,789 on Feb. 1, 2001.
While oil prices may not cheer consumers, they are a big reason for the nice finish to the week. Crude oil closed at $72.72 a barrel in New York, up 66 cents. That helped energy stocks rally. The Standard & Poor's Energy Index was up 1.3% to 548. The Amex Oil Index ($XOI.X) was up 1.23% to 1,459, and the Philadelphia Oil Service Sector Index ($OSX.X) jumped 1.3% to 273.80.
Crude's gains were helped by unrest in Nigeria, including the kidnapping of the daughter of an expatriate worker. They are having an impact at the pump. AAA said its daily survey of unleaded gasoline today was at $2.952 a gallon on Friday, up from $2.949 on Thursday. The price hit $3.17 a gallon in May.
The rally also was helped by a decent monthly jobs report. The report showed modest gains in payrolls and wages during June, dispelling the idea that the economy was slowing down in the spring and might be headed toward recession.
The jobs report did have one unsettling effect that could affect markets next week: It pushed interest rates higher again. The yield on the 10-year Treasury note closed at 5.195%, up from 5.144% on Thursday and 4.99% a week earlier. The Dow gained about 1.5% on the week. The S&P 500 had a 1.8% gain, and the Nasdaq was up more than 2.4%. For the year, the Dow is up 9.2%. The S&P 500 is up 7.9%, and the Nasdaq is up 10.4% -- more than it gained in all of 2006.
Volume was extremely light thanks to the July Fourth holiday, which gave many Wall Street professionals the excuse to leave New York. It was 1.1 billion shares on the New York Stock Exchange; 1.8 billion has been the average.
Earnings season starts next week
Alcoa's report is the traditional start for the onslaught of earnings reports.The week itself is fairly light, but it finishes with one of the biggest reports: General Electric (GE, news, msgs) on July 13.
The week following includes reports from Intel (INTC, news, msgs), IBM Corp. (IBM, news, msgs) and Google (GOOG, news, msgs).
Alcoa, which was up 0.7% to $41.64 on Friday, is expected to report 83 cents a share in earnings on revenue of $8.4 billion. The company has been trying to get rival Alcan (AL, news, msgs) to agree to a takeover. Friday, however, Alcan moved up 1.8% to $86.62 on reports that British mining giant Rio Tinto (RTP, news, msgs) would be bidding for the company.
The peak earnings weeks will be the weeks of July 16 and July 23. Thomson Financial is expecting earnings growth for the S&P 500 at only 4.1% for the quarter, but the company's early estimates in the first quarter proved low. Now, Thomson says, the S&P 500 companies overall showed 7.9% earnings growth.
| Close for week | Wk. ago close | % chg. | YTD. chg. | |
|---|---|---|---|---|
| Dow Jones industrials | 13,611.68 | 13,408.62 | 1.51% | 9.22% |
| S&P 500 | 1,530.44 | 1,503.35 | 1.80% | 7.91% |
| Nasdaq Composite | 2,666.51 | 2,603.23 | 2.43% | 10.40% |
| Russell 2000 | 852.31 | 833.70 | 2.23% | 8.21% |
| Crude oil per barrel | $72.81 | $70.68 | 3.01% | 19.26% |
| 10-yr. Treasury yield | 5.20% | 5.03% | 3.22% | 10.30% |
| Gold per troy ounce | $654.80 | $650.90 | 0.60% | 2.63% |
Jobs report provides cheer for bulls
The Labor Department said the unemployment rate held steady at 4.5% in June for the third straight month, as expected, but that 132,000 jobs were added -- more than the average forecast. The data also showed that more jobs were created in April and May than previously thought, and that June's average workweek ticked up 0.1%, more than anticipated.Friday's jobs report was the most significant economic release of the shortened week, and for the most part, investors were relieved that the data indicated a robust job market. If Americans are employed, they will likely keep spending and boosting corporate profits.
Although the positive snapshot boded well for the long-term performance of the stock market, it also raised worries about rising bond yields and the Federal Reserve's stance on inflation.
Treasury bond prices weakened after the employment numbers, pushing up the 10-year Treasury note's yield toward. The yield is up more than 7 percentage points since the end of 2006. High yields can make mortgages more expensive for home buyers, slow down business deals and make bonds appear a more attractive investment than stocks.
Still, to many analysts, the higher rates are a positive sign. John O'Donoghue, a co-head of equities at Cowen & Co., said it is unlikely investors will start selling stocks to invest in Treasurys unless the 10-year yield rises and stays above the 5.25% to 5.30% level.
"If yields are going higher because there's growth in the economy, that's actually good for stocks," O'Donoghue said.
| Close | Chg. for wk. | YTD chg. | |
|---|---|---|---|
| S&P 500 Index | 1,530.44 | 1.80% | 7.91% |
| Energy | 546.86 | 3.24% | 20.05% |
| Materials | 256.57 | 2.59% | 18.48% |
| Industrials | 360.41 | 1.67% | 11.71% |
| Consumer discretionary | 317.07 | 2.21% | 4.67% |
| Consumer staples | 280.94 | 0.90% | 4.67% |
| Healthcare | 413.76 | 1.16% | 6.44% |
| Financials | 492.27 | 1.41% | -0.61% |
| Information technology | 398.46 | 2.64% | 11.84% |
| Telecommunications | 176.21 | 0.01% | 13.58% |
| Utilities | 202.13 | 1.01% | 8.32% |
Energy and materials power the market
Caterpillar (CAT, news, msgs) and ExxonMobil (XOM, news, msgs) were the biggest drivers for the down. Cat was up 1.7% to $78.81, rebounding after a downgrade earlier in the week. Exxon's 1.3% move to $86.46 was a result of those higher energy prices.The S&P 500 was led by Target (TGT, news, msgs), up a whopping 6% to $68.10 as the market traded on a rumor that the Minneapolis discount retailer was going to sell its credit card business. The company shot down the speculation late in the day, but not before shares touched an all-time high of $68.24.
Newmont Mining (NEM, news, msgs), the big gold mining company, was up 5.6% to $41.78 after announcing it was going to focus on mining and got rid of all gold hedges and will exit the merchant-banking business. Merchant banking is like investment banking.
Stock Charts (Year)
Macy's
Genzyme (GENZ, news, msgs) was the S&P's biggest loser, down more than 6.2% to $60.85 after saying its bacteria-related diarrhea treatment candidate, tolevamar, failed to be as effective as current treatments in a late-stage study.
EBay (EBAY, news, msgs) was up 3.5% to $33.39 after a launching a site for free classified ads. One analyst said the site could prove as important as the company's other businesses. InfoSys (INFY, news, msgs), an Indian tech company, was up 4.8% to $52.59. Susquehanna Financial Group analyst James Friedman said in a note Friday that the company plans to increase its size and expand its customer base through selective acquisitions.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $72.81 | $71.81 | $1.00 | 3.01% | 19.26% |
| Heating oil (per gallon) | $2.0951 | $2.0873 | $0.0078 | 3.11% | 31.12% |
| Natural gas (per million BTU) | $6.4440 | $6.6180 | -$0.1740 | -4.86% | 2.30% |
| Unleaded gasoline (per gallon) | $2.3096 | $2.2843 | $0.0253 | 0.67% | 44.16% |
CEO's exit boosts UBS
Shares of Swiss bank UBS AG (UBS, news, msgs) rose 0.9% to $61.11 Friday as the bank said its strategy remained unchanged a day after the ouster of its chief executive.Marcel Rohner, named to replace Peter Wuffli as CEO, said during a conference call that the company would continue to operate a major private bank alongside investment banking activities.
Analysts and investors have pushed for a breakup of the bank, saying that the individual sectors of UBS are more valuable that the financial conglomerate.
Analysts, surprised by Wuffli's sudden departure, voiced new concerns over expected losses from failed in-house hedge fund Dillon Read Capital Management, which is being shut down.
Losses at the hedge fund had contributed to the 6.5% decrease in the bank's first-quarter net profit to 3.28 billion Swiss francs ($2.71 billion). UBS said the losses at its hedge fund business came as a result of volatility in the U.S. mortgage market and because last year's results got a boost from asset sales.
More from MSN Money
GM finishes under pressure
Shares of General Motors (GM, news, msgs) slipped nearly 0.7% to $36.49 on Friday, its second loss in a row, after a JPMorgan Chase analyst trimmed his profit expectations through 2009.Analyst Himanshu Patel now expects earnings of $3 per share for this year, down from his prior estimate of $3.50 per share. For 2008, he cut his profit forecast to $3.60 from $4.10 per share, and for 2009, to $3 from $4.30.
Stock Charts (Year)
General Motors
For the week, GM was down 3.5%.
A sweeter bid for CBOT
For the third time and ahead of shareholders votes next week, Chicago Mercantile Exchange Holdings (CME, news, msgs) Friday raised its offer to buy crosstown rival CBOT Holdings (BOT, news, msgs).The increased bid would give Chicago Board of Trade shareholders a 36% ownership stake in the combined exchange, up from 35% under the previous agreement. All other terms would remain the same.
Shareholders of CME and CBOT are scheduled to vote on the deal Monday. For CME, the latest offer is designed to persuade shareholders to vote against a rival bid from IntercontinentalExchange (ICE, news, msgs). Chicago Merc jumped 3.4% $574.80. CBOT
was up 8.7% to $224.
Bausch & Lomb splitting to merge?
Shares of Bausch & Lomb (BOL, news, msgs) spiked Thursday on word that Advanced Medical Optics (EYE, news, msgs) had made a takeover bid of $75 per share in cash and stock, trumping a $65-per-share offer from Warburg Pincus, a private-equity firm.Friday, however, analysts were saying that the two eye-care companies would probably have to sell some businesses to appease regulators if they proceeded with a proposed $4.3 billion tie-up.
Advanced Medical Optics said the deal would be part of its strategy to offer a full spectrum of eye-care products. But some analysts said the combined company would have too strong of a hold on the market.
Robert W. Baird analyst Jeff Johnson said that to convince antitrust regulators otherwise, Bausch & Lomb would have to sell part of its refractive eye surgery business, which accounted for 5% of the company's $2.31 billion in sales last year.
Bausch & Lomb closed unchanged at $72. Advanced Medical Optics was down slightly at $35.85.
Microsoft hit by Xbox move
Microsoft (MSFT, news, msgs) shares fell 0.07%, or 2 cents, to $29.97 Friday afternoon after the company said it will extend the warranty for the Xbox 360 video game console, taking a charge of $1.05 billion to $1.15 billion for repairs. (Microsoft is the publisher of MSN Money.)Customers who bought Xboxes that suffered hardware failures are now covered by a three-year warranty from date of purchase. Those who have already paid for repairs will be reimbursed. Microsoft said it had made improvements to new consoles.
Friedman Billings Ramsey analyst David M. Hilal called the news disappointing but said cost increases are part of the consumer-electronics business. He reiterated an "outperform" rating and a price target of $38 per share.
| Fri. | Thur. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 4.790% | 4.810% | -0.020 | 2.57% | -1.94% |
| 5-year Treasury note yield | 5.099% | 5.049% | 0.050 | 3.30% | 8.47% |
| 10-year Treasury note yield | 5.195% | 5.144% | 0.051 | 3.22% | 10.30% |
| 30-year Treasury bond yield | 5.282% | 5.237% | 0.045 | 3.04% | 9.63% |
| Currencies | |||||
| U.S. Dollar Index | 81.26 | 81.31 | -0.05 | -0.53% | -2.60% |
| British pound in dollars | $2.0121 | $2.0125 | -0.0004 | 0.04% | 2.68% |
| Dollar in British pounds | £0.4970 | £0.4969 | 0.0001 | -0.04% | -2.61% |
| Euro in dollars | 1.3631 | 1.3596 | 0.0035 | 0.57% | 3.27% |
| Dollar in euros | € 0.7336 | € 0.7355 | -0.0019 | -0.57% | -3.17% |
| Dollar in yen | ¥123.33 | ¥122.90 | 0.43 | 0.33% | 3.62% |
| Commodities | |||||
| Gold | $654.80 | $650.60 | $4.20 | 0.60% | 2.63% |
| Copper | $3.5945 | $3.5935 | $0.001 | 4.17% | 25.20% |
| Silver | $12.7570 | $12.5800 | $0.18 | 2.28% | -1.38% |
| Crude oil (NYMEX) (per barrel) | $72.81 | $71.81 | $1.00 | 3.01% | 19.26% |
By Charley Blaine with wire reports
Rate this Article
High