Markets & Finance

Stocks End Flat


Stocks closed flat on Friday after blue chip bellwether General Electric (GE) posted earnings that met Wall Street expectations, but lowered its fourth quarter outlook.

The Dow Jones industrial average was off 5.33 points, or 0.06%, to 9,674.68. The broader Standard & Poor's 500 index eased 0.67 of a point, or 0.06%, to 1,038.06. The tech-heavy Nasdaq composite index added 3.41 points, or 0.18%, to 1,915.31.

Next week offers a full complement of economic reports. Among the biggies, on Wednesday investors will get word on September retail sales. They are seen ticking up 0.2% vs. a 0.6% increase in the previous month. On Thursday, a reading of prices at the consumer level in September is expected to show a 0.3% increase, according to economic research firm MMS. Weekly jobless claims come out on Thursday, while Friday will feature figures on housing starts and consumer sentiment in October.

On the equities front, companies releasing earnings next week include Johnson & Johnson (JNJ) and Bank of America Tuesday morning with chip giant Intel (INTC) due the same day after the close. Wednesday morning sees GM (GM) while IBM (IBM) reports Wednesday evening. Coca-Cola (KO) announces Thursday morning along with wireless bellwether Nokia (NOK) while United Technologies (UTX) reports in the afternoon.

On Friday, GE, which makes aircraft engines and owns the NBC television network, posted 11% lower earnings including a $372 million accounting charge. But without the charge, its profits were in line with estimates. However, GE cut its earnings outlook for the fourth quarter. Also, GE said it planned to buy British diagnostics concern Amersham (AHM), for $8.83 billion.

Along with industrial conglomerates, pulling the market lower were airlines, home furnishings insurance brokers. On the upswing were semiconductors after Deutsche Bank raised its investment rating on Texas Instruments (TXN).

In economics news, the producer price index, a measure of inflation at the wholesale level, rose 0.3% in September, which was well above the median forecast of 0.1%, says economic research firm MMS. But core prices in the PPI (excluding food and energy) were unchanged, compared to a 0.4% headline gain and a core gain of 0.1% in August.

In other earnings news, furniture maker La-Z-Boy (LZB) warned it was cutting its quarterly profit forecast because of lower sales and over capacity.

Moody's Investors Service cut Computer Associates (CA) short- and long-term debt ratings, saying the company's recognition of revenue was not clear.

On the plus side, Juniper Networks (JNPR), the second largest network gear maker, posted a quarterly profit on 13% higher revenues thanks to more spending by telecommunications carriers. The results beat expectations.

The bond market will be closed Monday in observance of the Columbus Day holiday. U.S. stock markets will be open for trading Monday.

Treasury Markets

Treasuries finished Friday's holiday-shortened session higher in price. The market benefitted from a short-covering rebound, enlisting support from benign inflation data and some swap activity. Gains were most pronounced in the middle of the yield curve, which had been inundated with a variety of supply this week. Ahead of the long Columbus Day holiday weekend, technicals and position-driven gains set the tone, with little directional input from neutral stocks or the damp dollar.

In economics news Friday, the U.S. trade deficit narrowed to $39.2 billion in August following deficits in the low $40 billion area in June and July, says MMS. Imports fell 2.5% after a revised 1.2% gain in July (previously +1.6%). Exports fell 2.7% following a revised 1.8% gain in July. The declines in both imports and exports was somewhat surprising, as was the narrowing in the deficit, and are likely a correction after strong gains in recent months, MMS says. The data may give the dollar some breathing room.

Meanwhile, import prices fell 0.5% in September after a revised 0.1% gain in August (+0.2% initially). Export prices rose 0.4% a revised flat reading in August (-0.1% previously). The decline in import prices was a function of the 5.2% drop in energy prices and the 1.3% decline in industrial supplies prices, MMS says.

World Markets

European stock markets finished lower. London's Financial Times-Stock Exchange 100 index was off 2.90 points, or 0.07%, to 4,311. Among the gainers were Amersham Plc after General Electric announced a $9.5 billion deal to acquire the maker of laboratory equipment. Other gainers included Cambridge Antibody Technology, while Allied Domecq was lower.

In Paris, the CAC 40 was down 18.87 points, or 0.57%, to 3,306.12. Among the losers were telecommunication co. Alcatel.

Germany's DAX index lost 10.65 points, or 0.31%, to 3,471.25. Among the gainers were Schering AG, HVB Group and Commerzbank.

Asian markets finished higher. In Japan, the Nikkei 225 index added 254.60 points, or 2.42%, to 10,786.04 on the Bank of Japan's unexpected monetary easing announced mid afternoon. In Hong Kong, the Hang Seng index gained 135.46 points, or 1.15%, to 11,935.83.


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