Dow off 60; a huge earnings week is ahead

The stock market had its fourth weekly loss in a row despite President Bush's call for a stimulus plan to help the economy avoid a recession.

The Dow Jones industrials finished Friday down 60 points, or 0.5%, to 12,099. The Standard & Poor's 500 Index was down 8 points, 0.6%, to 1,325, and the Nasdaq Composite Index finished down 7 points, 0.3%, to 2,340.

The market was weighed down by weakness in financial and energy stocks on Friday. Oil-service giant Schlumberger (SLB, news, msgs) disappointed Wall Street with its fourth-quarter earnings report and pulled most energy stocks lower. The stock finished down 3.6% to $79.52. It had been down as much as 12% in the early afternoon.

In addition, financial stocks continued to struggle because of worries about bond insurers such as Ambac Financial (ABK, news, msgs). Fitch Ratings cut Ambac's financial strength rating to AA from AAA after Friday's close. The stock closed down 4 cents to $6.20; it's down 76% since Dec. 31.

But chip stocks moved higher on a smaller-than-expected loss for Advanced Micro Devices (AMD, news, msgs), whose shares jumped 11.5% to $7.07. The Philadelphia Semiconductor Index ($SOX.X) jumped 2.4% to 358.

The Dow had opened up 182 points in the first 40 minutes of trading because of a bullish 2008 forecast from IBM Corp. (IBM, news, msgs) and strong fourth-quarter earnings from General Electric (GE, news, msgs). GE finished up 3.3% to $34.31. IBM added 2.3% to $103.40.

But the blue chips promptly gave up all of that gain. The index was down as many as 137 points in the early afternoon before recovering some of its losses.

For the week, the Dow was down 4% and is down 8.7% in January. The S&P 500 is down 5.4% and 9.8% for January. The Nasdaq fell 4.1% for the week but is down 11.8% this month.

Crude oil and gold were both slightly higher at $90.57 a barrel and $881.70 an ounce, respectively in New York. For the week, crude fell 2.3%. Gold fell 1.8%. Watch to see if commodities prices fall again next week.

Investors get a break, then earnings

Investors will get some respite from the selling pressure on Monday, when markets will be closed for the Martin Luther King Jr. holiday.

When trading resumes, however, investors will face the two biggest weeks of the fourth-quarter earnings season.

Next week alone will see earnings reports from the likes of Apple (AAPL, news, msgs), Johnson & Johnson (JNJ, news, msgs), United Technologies (UTX, news, msgs), Motorola (MOT, news, msgs), AT&T (T, news, msgs), Honeywell International (HON, news, msgs), Caterpillar (CAT, news, msgs), eBay (EBAY, news, msgs) and Microsoft (MSFT, news, msgs). (Microsoft is the publisher of MSN Money.)

• Check MSN Money's earnings calendar

Apple, which closed up 0.3% to $161.36 on Friday, may well command the most attention. The stock finished 2007 up 133% on the year, but it has fallen 21% from its Dec. 27 intraday high of $202.96.

Apple has one of the most powerful brands in the world, and it generated enormous excitement over the introduction of its iPhone last year.

A big question is whether all the excitement can ensure big earnings gains going forward. Other wireless phone makers are introducing new phones with similar features.

A separate issue is whether the sales gains that its Macintosh computers have seen can continue in a slowing economy. Guidance will be a key issue, although Apple historically has offered very conservative guidance.

The markets for the week

	Close for week	Wk. ago close	% chg.	YTD. chg.
Dow Jones industrials	12,099.30	12,606.30	-4.02%	-8.79%
S&P 500	1,325.19	1,401.02	-5.41%	-9.75%
Nasdaq Composite	2,340.02	2,439.94	-4.10%	-11.77%
Russell 2000	673.18	704.65	-4.47%	-12.12%
Crude oil per barrel	$97.91	$92.69	-2.29%	-5.64%
10-yr. Treasury yield	3.65%	3.81%	-4.25%	-9.59%
Gold per troy ounce	$881.70	$897.70	-1.78%	5.21%

Bush plan doesn't excite

The market seemed to dismiss the president's formal announcement of a plan to help stimulate the U.S. economy as simply too little and possibly too late.

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Bush called for an economic stimulus package that would equal about 1% of the country's gross domestic product and said tax incentives for business investments were necessary. "Letting Americans keep more of their money should increase consumer spending," Bush said Friday.

Speaking on NBC's "Today" show earlier Friday, Treasury Secretary Hank Paulson said -- rather confusingly -- that the stimulus program was not an emergency, but "there is an urgent need" for it.

"A huge part of this is going to be speed," Paulson said in a midday press conference.

Bush had hosted a conference call with top brass in Congress on Thursday to discuss ideas for a plan.

• Video: How to save more money

Bernanke told Congress that day that an efficient and temporary economic stimulus package could help prevent a recession. Bernanke said a package of up to $150 billion would help boost economic growth.

Bernanke's support of a stimulus plan could prompt Congress to act quickly to give some help to the economy.

Schlumberger weighs on market

Weighing on the market were slumping energy stocks, after oil-service giant Schlumberger's (SLB, news, msgs) earnings missed analyst estimates.

The stock has fallen 31% since mid-October.

Schlumberger said earnings rose 22% to $1.12 a share on strong demand in the Eastern Hemisphere and Latin America. But analysts had expected earnings would top $1.13 a share.

Financial stocks continued to be weak, in part because of worries about the health of bond insurers. American International Group (AIG, news, msgs) was the second-worst Dow performer, down nearly 4.1% to $52.05.

The concern over bond insurers is that they enabled financial giants like Merrill Lynch (MER, news, msgs) and Citigroup (C, news, msgs) to hedge the value of their portfolios of mortgage-related securities. If a bond insurer goes under, the hedges are worthless.

• Talk back: What would you do with your economic bailout cash?

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$90.57	$90.13	$0.44	-5.64%	-5.64%
Heating oil (per gallon)	$2.5074	$2.5035	$0.0039	-5.36%	-5.36%
Natural gas (per million BTU)	$7.9930	$8.0810	-$0.0880	6.82%	6.82%
Unleaded gasoline (per gallon)	$2.3034	$2.2668	$0.0366	-7.52%	-7.52%

IBM's stellar forecast

IBM shares jumped after the computer giant said late Thursday that it expects to earn between $8.20 and $8.30 per share in 2008, above Wall Street's estimate of $7.94. The 2.3% gain for the shares was the second-best performance among the 30 Dow stocks and good for 19 points for the index.

• Video: Inside IBM

Big Blue said it expects to hit its target of $10 to $11 per share by 2010."The guidance was much better than expected," analyst Shaw Wu at American Technology Research told MarketWatch.com. "It looks like IBM is still confident in driving profitable growth amid the tougher (economic) environment."

IBM had helped stocks rally on Monday by pre-announcing its better-than-expected earnings of $3.95 billion, or $2.80 per share, in the fourth quarter.

The tech giant also said sales rose 10% to $28.9 billion, helped by strength in its global-services division, which makes up more than half of its overall revenue.

GE profit rises

General Electric's 3.3% gain was the best performance among the 30 Dow stocks.

GE said it earned $6.7 billion, or 66 cents per share in the fourth quarter, a 15% increase from $6.44 billion, or 62 cents per share, in the fourth quarter of 2006. Earnings were in line with the consensus estimate, while revenue beat Wall Street's estimate of $47.28 billion, rising 18% to $48.59 billion in the quarter.

The company reaffirmed its 2008 forecast of $2.42 per share.

Continued: Washington Mutual shares jump on takeover talk

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