The Dow Jones industrial average finished up 10.47 points, or 0.1%, at 10,139.71. The broader Standard & Poor's 500 index added 1.29 points, or 0.12%, to 1,101.72. The tech-heavy Nasdaq composite gained 6.3 points, or 0.33%, to 1,887.36.
By the end of the trading session, investors were already looking ahead to next week, which promises another full slate of earnings reports. Among the earnings highlights
are consumer products giant Procter & Gamble (PG
) and cigarette maker R.J. Reynolds Tobacco Holdings (RJR
) on Monday, followed on Tuesday by conglomerate Tyco International (TYC
) and phone company Qwest Communications (Q
). On Thursday is financial services outfit KeySpan (KSE
Economic news will also be closely watched. Topping the list of key reports will be July employment figures due out on Friday. Wall Street expects 243,000 jobs to have been created in July, vs. 112,000 in June. Even if that number is reached, it will still not be enough to absorb all the workers who want jobs, economists say.
Another key report will be a reading of manufactuing activity in July. The Institute of Supply Managment index for July, expected on Monday, is seen showing a decline in activity to a 60.0 reading, vs. 61.1 in the previous month. Still, any reading over 50 indicates an expansion.
Other highlights is a report on July factory orders, expected on Thursday. Orders are seen rising 0.3% in the month, vs. a 0.3% decline in June.
Among the Nasdaq companies posting better earnings on Friday was biotech outfit Gilead Sciences (GILD
). Its profits rose, thanks to stonger sales of its HIV drug.
The market, however, was kept in check by a report that U.S. real gross domestic product rose at a 3.0% annualized pace in the second quarter, vs. expectations of around 3.5%, according to Informa Global Markets. Investors fear a slow-down in economic growth could crimp profits at America's biggest companies.
The GDP price index, an indicator of inflation, was up 3.2%, vs. expectations of 2.7% to 3.0%. And personal consumption spending rose 1.0%, vs. expectations of 1.5% to 2.0%. "This is where the disappointment mostly lies," says Informa. "Overall, not a good mix."
The Dow and the Nasdaq were also held back by Intel (INTC
), the world's largest chipmaker, which warned it will not meet its year-end target for delivering a high-speed computer chip.
And casting a pall over the markets was news that crude prices hit another 21-year high on the Nymex, with a barrel reaching $43.75. Informa says strong global demand, especially from China, is a key factor while a higher terror-related risk premium is also helping to lift the structural floor under oil prices. "While this overall trend is a boom to the oil/drilling sector of the economy, it poses a headwind to consumer-led growth and profits for most other companies," Informa says.
But there were a couple of more positive economic reports to counter the negative GDP news. The University of Michigan reported that consumer confidence in July improved to 96.7, vs. a prior 96.0, which was about as expected, Informa Global Markets says.
Also, a regional gauge of manufacturing activity came in higher than expected. The Chicago Purchasing Managers' Index registered a 64.7, vs. a prior 56.4, according to Informa. A reading of 58 had been expected, and any number over 50 indicates an expansion. The one worrying number was employment, which logged in at 45.6, vs. 53.6 in the previous month. "This is the worrying bit ahead of next week' jobs data release," says Informa.
Corporate news was mixed. ChevronTexaco, the second largest U.S. oil company, posted quarterly earnings that more than doubled thanks to higher energy prices and some one-time gains.
Newspaper publisher Washington Post (WPO
) posted 40% higher second-quarter profits, thanks to strong revenue growth at its Kaplan education division.
Oil and gas producer Anadarko Petroleum (APC
) reported 35% higher quarterly profit thanks to higher energy prices and lower costs.
In other corporate news, Target (TGT
) agreed to sell its Mervyn's department stores for $1.65 billion in cash to an investment group.
But American Electric Power (AEP
), the largest U.S. power producer, posted a 43% decline in quarterly profit because of higher expenses in its utility operations.
And Citigroup (C
), the world's largest financial services outfit, faces a lawsuit from Italian food group Parmalat seeking $10 billion in damages stemming from payments made before Parmalat went insolvent in December, 2003.
Global insecurities also weighed on the market. According to news reports, there were explosions resulting in casualties at the U.S. and Israeli embassies in Tashkent, Uzbekistan.
Treasuries ground higher, sparked by weaker than expected data and some month-end buying, according to Informa. But large buying of 5-year notes also helped. The yield on the 10-year note fell to 4.47%.
European stock markets closed mixed on Friday. London's Financial Times-Stock Exchange 100 index was down 5.6 points, or 0.13%, to 4,413.1. BP was higher. Rio Tinto was also higher after its chairman said China's demand for metals and minerals will continue to support markets in the long term. Lloyds TSB was lower after the company said its net income fell.
Germany's DAX index added 5.93 points, or 0.15%, to 3,895.61 as oil prices rose to 21-year highs on fears of shortages. There was little reaction to reports that the European Monetary Union economic sentiment index rose to 100.1 in July from 99.7 in June, and the business climate index rose to 0.58 from 0.44 in June. Deutsche Bank fell after saying second-quarter earnings rose 15% but were lower than analysts expected. Deutsche Post was up after the company increased its earnings forecast for the year. Metro Group was lower despite reporting higher second-quarter earnings. Suedzucker was lower after traders were disappointed that the company left its dividend unchanged.
In Paris, the CAC 40 index gained 3.31 points, or 0.09%, to 3,647.1 despite the fact the French unemployment rate rose to 9.0% in June and consumer sentiment was unchanged in July. Alcatel was lower after Lehman and CSFB cut their share estimates. Infogrames Entertainment was lower after saying first-quarter earnings slumped 93%.
Asian markets finished higher on Friday. Japan's Nikkei 225 index rallied 208.94 points, or 1.88%, to close at 11,325.78 led by techs and financials. Advantest climbed 3.33% while Sony added 2.36%. Strong April-June quarter results boosted Matsushita Electric and Hitachi shares. Matsushita Electric said on Thursday its quarterly profit more than doubled on strong sales of plasma TVs and home appliances, while Hitachi turned profitable in the latest quarter on the back of brisk demand for hard disk drives and PDP TVs. UFJ Holdings soared over 10% following news that Sumitomo Mitsui Financial Group (SMFG) was considering a takeover of UFJ. Following SMFG's comment, Mitsubishi Toyko Financial Group said it would seek an early agreement to merge with UFJ.
On the economic front, Japan's June nationwide CPI dropped 0.1% year-over-year, while the jobless rate remained unchanged during the month at 4.6%.
In Hong Kong, the Hang Seng index gained 54.93 points, or 0.45%, to close at 12,238.03 with property and utility names leading gains.