Markets & Finance

Stocks End Modestly Lower


Stocks finished slightly lower in a shortened session Friday as investors appeared to have lost some of their appetite after Wednesday's pre-holiday buying binge.

The Dow Jones industrial average declined 36.50 points, or 0.41%, to 8,895.27. The blue chip average still registered its eighth consecutive weekly gain as some favorable economic data this week raised hopes for profits revival.

The tech-heavy Nasdaq composite index fell 9.11 points, or 0.61%, to 1,478.83. The broader S&P 500-stock index was down 2.56 points, or 0.27%, to 936.31.

Stock trading was open until 1 p.m. Friday, and volume was fairly light.

Next week, economic news will be heavy. On Monday, the Institute for Supply Management will report its November reading on manufacturing activity. Most economists expect the ISM index to rise to 50.6 from 48.5 in October. A reading above 50 indicates an expansion in the factory sector. Auto makers will also report sales for the month of November.

On Wednesday, the government will release third-quarter productivity and unit labor costs. Factory orders and the ISM's services index also come out that day.

The key report is the Friday, Dec. 6, update on employment. The median forecast from economists is for a 25,000 rise in nonfarm jobs in November, after a 5,000 decline in October. In a separate survey, the unemployment rate is expected to rise to 5.8% from 5.7% in the previous month. Hourly earnings are seen rising 0.3%, and the average workweek is projected to inch up to 34.2 hours.

On Friday, tech stocks got some help from the Semiconductor Industry Assn., which said that world chip sales rose 1.8% to $12.5 billion in October from $12.3 billion in the previous month. Sales also jumped 20% from the $10.4 billion in October of last year. The industry group expects a healthy recovery will continue into the fourth quarter.

Wall Street also had an eye on the shopping malls and major retailers. The Friday after Thanksgiving -- the important kickoff to the holiday shopping season -- is known as "Black Friday" on the Street. Investors on Monday will be looking for signs that the big shopping day did not disappoint too badly. Retailing stocks were mostly flat Friday.

Projections for the holiday season are mixed but mostly point to a modest increase relative to last year, reports economic research outfit MMS International. The National Retail Federation expects total holiday retail sales (excluding restaurant and auto sales) will increase 4% to about $209.25 billion, the weakest increase since 1997.

Meanwhile, the Bank of Tokyo-Mitsubishi projects same-store sales to rise 3% for the combined November and December period, vs. a 2.2% increase last year. Holiday sales totaled $201.2 billion last year, up 5.6%. It's worth noting that the post-Thanksgiving weekend is no longer is the busiest period of the season; it garnered only 8.4% of holiday sales. The busiest period was the last week before Christmas, which accounted for 34%, according to the International Council of Shopping Centers.

In company news, UAL (UAL), which operates United Airlines, said a key union vote failed to endorse wage cuts and other cost reductions Thursday. The vote will make a $1.8 billion federal loan guarantee all the more difficult for the struggling airline.

Sealed Air (SEE) jumped 54% to $37.71 after it agreed to resolve all current and future asbestos-related claims, pending fraudulent transfer claims. Deutsche Bank upgraded the stock to buy from neutral on the news.

Troubled drug company Schering-Plough (SGP) has narrowed its search for a CEO to two candidates, and won approval from the FDA to sell Claritin over-the-counter, according to media reports.

Treasury Market

U.S. Treasuries were up slightly in price in a flight to safety from increased Middle East tensions. Traders were also a bit skeptical of recent reports showing the economy is reviving, and putting focus on next week's employment report, says S&P MarketScope. The market closed early Friday.

World Markets

European markets ended lower. Investors booked profits prior to next week's activity, which will see the release of some pivotal data, and the last European Central Bank meeting date of the year-all signals point toward a looming rate cut, says chief economist Sherry Cooper at BMO Nesbitt Burns. In economic news, European consumer confidence in November fell to the lowest level in more than five years and inflation slowed for the first time since June, according to press reports.

In London, the FTSE-100 index lost 16 points, or 0.4%, to 4,169.40. Frankfurt's DAX index fell 22 points, or 0.65%, to 3,338.78. The Paris CAC 40 index was down 3.34 points, or 0.5%, to 3,326.65.

In Asia, stocks ended mixed. Investors in Japan found reason to buy following Wednesday's rally in the U.S. Japan's Nikkei 225 Index closed up 38.78 points, or 0.42%, to 9,215.56. In Hong Kong, the Hang Seng index shed 77.97 points, or 0.77%, 10,069.87.


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