The Dow Jones industrial average ended higher by 37.96 points, or 0.49%, to 7,859.71, benefiting from gains in United Technologies (UTX
), International Paper (IP
), and Honeywell (HON
). The broader Standard & Poor's 500-stock index gained 1.36 points, or 0.16%, to 833.26.
The tech-laden Nasdaq composite index edged lower by 0.53 point, or 0.04%, to 1,340.24, restrained by weakness in Dell Computer (DELL
) and semiconductor issues.
Friday's gains came on the heels of a powerful rally in the previous session, featuring the highest volume trading of the year. The brisk buying was spurred by an announcement from the White House that it would delay a U.N. resolution on Iraq to fully disarm or face war.
On Friday afternoon, word came from the White House that Bush, British Prime Minister Tony Blair and Spanish Prime Minister Jose Maria Aznar will meet in the Azores this weekend to discuss Iraq and the U.N. Bush has probably lost any chance of gaining formal U.N. approval for attacking Iraq. With a final decision on war just days or weeks away, the stock market is expected to remain under pressure until the crisis subsides or reaches a conclusion. Crude oil prices began falling after the announcement of the Azores summit.
"The president is ... prolonging the state of uncertainty," said Thorsten Fischer, economist for Economy.com, in the firm's daily analysis.
While few large companies reported earnings or host conference calls Friday, it was a big day for economic news. The Wall Street Journal reported that economists are slashing estimates for first-half U.S. growth, citing war concerns, higher fuel costs, and declining employment.
Investors digested a fresh batch of economic data. The February producer price index, a gauge of inflation on the wholesale level, was up 1%, boosted by energy prices. The core index (which excludes volatile food and energy prices) was down 0.5%.
Also, January business inventories climbed 0.2%. "The rise was due to a newly revealed 0.7% gain in retail inventories, along with the already reported unchanged level of manufacturing inventories and a modest dip in wholesale inventories," economic research outfit MMS International said.
Meanwhile, the preliminary figures for the University of Michigan Consumer sentiment survey for March showed a drop from 79.9 in February to 75.0 this month -- the lowest level since October, 1992.
The weakness in consumer sentiment has been reflected in the auto sector, where Ford (F
) plans to cut second-quarter output 17%, the company said. Rival General Motors (GM
), however, is betting demand will rebound if a war is brief.
Industrial output grew just 0.1% in February as war anxiety continued to hamper economic activity, the government reported.
In the technology sector Friday, Adobe Systems (ADBE
) the world's largest maker of software for publishing and design, jumped after saying a rebound in sales caused profit to rise in the first quarter. Corning (GLW
) climbed as a UBS Warburg analyst said the company will benefit from growth in its liquid crystal display business.
Headlining the healthcare sector Friday, the Food and Drug Administration cleared for sale a highly anticipated AIDS drug. Fuzeon, developed by Trimeris (TRMS
) and sold by European drugmaker Roche (RHHBY
) will give patients who no longer respond to other treatments a powerful but costly new weapon in fighting the disease.
Also in the drug industry, Baxter International (BAX
) cut its sales and earnings forecast, and German drug giant Bayer (BAY
) hosted a conference call to discuss its earnings outlook and its exposure to lawsuits over the cholesterol reducing drug Baycol.
Next week, investors will get the latest update on strength in the housing market from the National Home Builders' Association on Monday. "Builders' optimism about the new home market may fade a bit, but will remain at a sturdy level. Decades-low mortgage rate are propping up sales of new homes," Economy.com said. Tuesday the semiconductor book-to-bill ratio is released, as well as a snapshot of chain store sales and new residential construction for February.
A meeting of the Federal Open Market Committee, the Federal Reserve's policy-setting arm, is also scheduled for Tuesday. Most economists don't expect a rate cut from Alan Greenspan & Co. But many observers are expecting a shift in the Fed's risk assessment from balanced to one of economic weakness, especially in light the surprisingly large drop in nonfarm payrolls earlier this month, and the ongoing rise in oil prices.
Wednesday brings the mortgage bankers' applications survey and oil and gas inventories, while on Thursday, the jobless claims for the week of March 15 and the Conference Board's leading indicators will be released.
Finally, the consumer price index will be released Friday.
Treasury prices ended higher Friday as a safe-haven bid returned to the market after Thursday's sell-off. Treasuries benefited from a lack of follow-through on Thursday's huge stock rally, after initial weakness.
European stocks are recording their second consecutive positive day. In London, the Financial Times-Stock Exchange 100 index gained 114.9 points, or 3.3%, to 3,601.80. In Germany, the DAX index rose 48.88 points, or 2.08%, to 2,403.19, while France's CAC 40 index gained 185.30 points, or 7.25%, to 2,740.01.
Asian markets also had a good day. In Tokyo, the Nikkei 225 index finished up 134.13 points, or 1.70%, to close at 8,002.69, after reaching a 20-year low point earlier this week.
In Hong Kong, the benchmark Hang Seng index jumped 168.72 points, or 1.92%, to close at 8,956.17.