The Dow Jones industrial average fell 71.97 points, or 0.69%, to 10,371.84. The broader Standard & Poor's 500 index was down 6.33 points, or 0.55%, to 1,134.32. The tech-heavy Nasdaq composite index rose 9.9 points, or 0.49%, to 2,025.47 on strength in semiconductors and Internet software stocks.
The main event next week is the Federal Open Market Committee Meeting on Tuesday and Wednesday. The market expects the FOMC to raise the federal funds rate by a quarter percentage point to 1.25%.
The only drama regarding the FOMC is with the statement, says Action Economics, although Chairman Alan Greenspan's recent comments have been fairly telling as well. His benign tone in his confirmation testimony hints that even if the word "measured" is erased from the statement, the gist will remain the same, says Action Economics. And his sanguine outlook on inflation (along with the tame core CPI figure for May) also suggests that the FOMC will retain its balanced view with respect to price risks, according to Action Economics.
Meanwhile, recent data -- namely the drop in durable goods and the downward revision to first-quarter GDP -- can allow the Fed to maintain a balanced posture on risks to the economy, says Action Economics. "All in all, the statement should not revive fears the FOMC will be on an aggressive tightening path."
The other main event is Friday's employment report for June. Economists expect non-farm payrolls to rise by 225,000 and the unemployment rate to remain at 5.6%.
Among the other key economic reports, personal income and spending will be out on Monday, consumer confidence on Tuesday, and Chicago-area purchasing managers' index on Wednesday. Weekly jobless claims, ISM manufacturing survey, and June sales from automakers come Thursday, followed by factory orders on Friday.
Major companies on next week's earnings calendar include Research in Motion (RIMM
) on Monday; American Greetings (AM
) and McCormick & Co. (MCK
) on Tuesday; General Mills (GIS
) and Constellation Brands (STZ
) on Wednesday; and ConAgra Foods (CAG
) on Thursday.
In economic news Friday, the final reading for first-quarter
gross domestic product (GDP) growth was revised lower to 3.9% from 4.4% previously. The consensus forecast was for the growth to stay at 4.4%. Though there were no significant surprises regarding component revisions for real growth, the upward revision on imports was smaller than expected, leaving accommodation for slightly weaker figures for inventories, consumption, and nonresidential investment, says economic research outfit Action Economics.
Within the GDP report, the 2.6% growth rate in the first-quarter chain price index was revised higher to 2.9%. The PCE deflator was also revised up a bit to 3.2% growth from 3.0%. "These latter figures should take some of the bid out of the Treasury market, but they should not impact expectations on Fed policy," says Action Economics.
Also out Friday was the University of Michigan's consumer sentiment survey for June, which rose to 95.6, from 90.2 in May. Existing home sales in May rose 2.6% to 6.8 million units, vs. an expected 6.55 million units.
Among stocks on the move Friday, pharmaceuticals were lower, after The New York Times reports that British researchers find Aricept for Alzheimer's Disease, marketed by Pfizer (PFE
) in the U.S., does not delay the onset of disability or need for a nursing home.
The Food and Drug Administration says it will take an additional 3 months to review Eli Lilly's (LLY
) investigational anti-depressant drug Cymbalta. Lilly shares fell.
) shares fell after the company says it does not expect it will be able to secure a definitive plea deal relating to alleged violations of Foreign Corrupt Practices Act. This could trigger termination rights under Titan's planned merger with Lockheed Martin (LMT
On the plus side, Nike (NKE
) shares jumped after the company posted better-than-expected fourth-quarter earnings per share of $1.13, vs. 92 cents a year ago, on a 17% revenue rise. Effective today, Nike's board authorized a new four-year, $1.5 billion stock buyback program.
) stock rose 7% on strong May-quarter results, helping boost the electronic equipment manufacturing group.
) shares were lower after the company reported fourth-quarter earnings per share of 16 cents, vs. 19 cents a year ago, as a 4-cents reserve and higher costs offset a 14% revenue rise. The company sees 9% to 11% fiscal year 2005 revenue growth.
) posted a fourth-quarter loss per share of 23 cents, vs. a 34-cent loss a year ago, on a slight revenue rise. It sees breakeven to 14 cents loss per share in fiscal year 2005 on revenue of about $18 million.
The bond market managed to conclude the pre-FOMC week on relatively solid footing, with yields drifting lower as certainty about a quarter-point hike next week leaves the market with little to lose, says Action Economics. Risk of weekend terror events ran high into the NATO meeting in Turkey and next week's Iraqi handover, however, keeping tensions high and the premium in safety. The yield on the benchmark 10-year note settled at 4.65%.
European stock markets finished mixed on Friday. London's FTSE 100 index was down 9.1 points, or 0.2%, to 4,494.1 on profit taking before the weekend.
Germany's DAX index rose 6.3 points, or 0.16%, to 4,013.35, even though the German Ifo business confidence index fell to a 9-month low. In Paris, the CAC 40 index fell 13.37 points, or 0.36%, to 3,742.38.
Asian markets finished higher on Friday. In Japan, the Nikkei index gained 36.25 points, or 0.31%, to close at 11,780.4 on the back of optimism that the country's economic recovery is firmly on track. But the index's gain was limited on worries over the strengthening yen, analysts say.
In Hong Kong, the Hang Seng index rose 21.84 points, or 0.18%, to close at 12,185.52, held back by losses in heavyweights such as HSBC.