Markets & Finance

Stocks Finish Solidly Higher


Stocks finished Friday's session in the plus column in a light volume session. Investors digested a flurry of mixed corporate earnings news and economic data.

The Dow Jones industrial average rose 83.55 points, or 0.92%, to 9,119.59, aided by strength in Home Depot (HD). The broader Standard & Poor's 500 index increased 9.43 points, or 0.95%, to 998.13. Meanwhile, the tech-heavy Nasdaq composite index was up 18.04 points, or 1.05%, to 1,733.9.

The major indexes all posted winning weeks. The Dow average ticked ahead 0.5% and the S&P advanced 1.3%. The Nasdaq continued its recent outperformance of the broader market, gaining 2.9% for the week. For the year, the Nasdaq has gained 28.7%, compared to a 13.4% gain for the S&P.

A busy week of corporate earnings news continued Friday. Before the opening bell, industrial conglomerate and Dow component General Electric (GE) announced lower second quarter profits. The company's earnings per share met Wall Street's expectations.

After Thursday's market close, telecommunications equipment maker Juniper Networks (JNPR) reported second-quarter profits of three cents a share, up from last year and a penny higher than analysts expected. The company forecast a flat third quarter. Juniper's stock price was slightly higher Friday.

Elsewhere, home improvement giant Home Depot rose on a Banc of America Securities upgrade of the stock from 'neutral' to 'buy'.

Shares in Coca-Cola (KO) slipped slightly on news that a federal prosecutor is investigating claims of false marketing and accounting fraud. The allegations stem from a civil suit brought against Coke by a former employee.

Leading losses in the Dow, Altria Group (MO) sank more than 3%, on continued legal worries. Earlier in the week, an Illinois court decided to review a decision favorable to Altria's Phillip Morris USA unit.

In the week ahead, "the big thing will be earnings news," says Edgar Peters, chief investment strategist at Pan Agora Asset Management. Solid earnings reports from major companies will bolster the market's recent gains, says Peters. He thinks the major multi-national companies will oblige, with a weaker dollar boosting overseas results.

Citigroup (C) leads off another crowded week of profit reports on July 14. Later in the week, other big-name companies expected to announce include: Johnson & Johnson (JNJ), Merrill Lynch (MER), Intel (INTC), Apple (AAPL), Ford (F), J.P. Morgan Chase (JPM), General Motors (GM), Microsoft (MSFT), and Coca-Cola, among many others.

In economic news Friday, the U.S. producer price index rose 0.5% in June, unexpectedly high, after a 0.3% dip in May. Core prices, however, fell 0.1% in June, vs. a 0.1% rise in May. According to economic research outfit MMS International, the June rise was distorted by volatile energy prices.

Also, the U.S. trade deficit widened slightly to $41.8 billion in May, up from a revised $41.6 billion deficit in April. Exports rose 0.9% in May, after a revised 1.8% April decline, and May imports rose 0.7%, vs. a 2.2% April decline. The data were in line with expectations.

In the coming week, economic data set to be released include: June retail sales numbers, the June consumer price index, May business inventories, June industrial production and capacity utilization data, June housing starts, and the University of Michigan consumer sentiment index for July.

Treasury Market

Prices of U.S. Treasuries posted small gains Friday. Trading was sluggish, with traders reluctant to make major commitments before July 15, when Federal Reserve Board chief Alan Greenspan testifies before the House Financial Services Committee about monetary policy.

World Markets

European markets finished trading higher Friday. In London, the Financial Times-Stock Exchange 100 gained 29.3 points, or 0.73%, to 4,058.1, as investors cheered the Bank of England's 25 basis point rate cut on Thursday. In Germany, the DAX Index rose 56.67 points, or 1.73%, to 3,326.51, on short covering. In France, the CAC 40 gained 39.99 points, or 1.29%, to 3,138.27.

In Asia, major stock indexes ended lower, following Thursday's broad decline on Wall Street. Japan's Nikkei index finished down 320.27 points, or 3.22%, to 9,635.35, led by profit-taking in technology shares. Meanwhile, Hong Kong's Hang Seng index fell 71.81 points, or 0.72%, to 9,911.5.


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