) raised concerns about the second-half earnings outlook, reports Standard & Poor's MarketScope. Also, crude oil prices climbed above $67 and the July trade deficit was wider than expected.
The Dow Jones industrial average dropped 85.58 points, or 0.8%, to 10,600.31. The broader Standard & Poor's 500 index was down 7.42 points, or 0.6%, to 1,230.39. The tech-heavy Nasdaq composite lost 17.65 points, or 0.81%, to 2,156.9.
September NYMEX crude oil surged $1.06 to a record close of $66.86 a barrel, after ranging between $66 and $67.10. Gasoline prices once again led the charge, with front-month gasoline futures topping the $2.00 a gallon mark for the first time, and closing up nearly 5 cents. "Refinery outages in the U.S. along with continued record demand for refined products are expected to keep a bid under the NYMEX complex for the foreseeable future," says Action Economics.
Next week's economic roster is pretty full. The Empire State manufacturing survey comes out Monday, followed by the consumer price index and industrial production data on Tuesday. The producer price index will be out Wednesday and the Philadelphia Fed survey and leading indicators will be released Thursday.
Tuesday is a heavy day on the earnings calendar. Applied Materials (AMAT
), Hewlett-Packard (HWP
), Home Depot (HD
), JC Penney (JCP
), Nordstrom (JWN
), Wal-Mart Stores (WMT
), are just a few companies reporting results that day.
In economic news Friday, the U.S. consumer sentiment index fell to 92.7 in the preliminary August report from the University of Michigan, down from the final 96.5 print in July. The current conditions index dropped to 110.4 from 113.5 in July. The expectations index was 81.3 from 85.5. The data are a little weaker than expected and likely reflect the ongoing surges in oil prices, says Action Economics.
The U.S. trade deficit widened sharply to $58.8 billion in June, from May's $55.4 billion red ink. Imports remained volatile, rebounding 2.1% after the 0.9% decline in May, boosted by a 20.2% surge in aircrafts. Oil imports also climbed 8.7%, reversing May's 8.6% decline. Exports were flat again after an unchanged reading in May. The wider than expected deficit should add to the dollar's woes, says Action Economics.
U.S. import prices rose 1.1% in July following the 1.0% increase in June, a little worse than expected. Helping boost was a 6.6% rise in petroleum after a 7.9% increase in June. Excluding petroleum, however, prices were down 0.1%. Meanwhile, export prices rose 0.1%, reversing the 0.1% dip in June, says Action Economics.
In earnings news, Dell (DELL
) reported 41 cents, vs. 31 cents, second-quarter earnings per share (GAAP basis) on a 15% revenue rise. The PC maker says average selling prices were down more than it would have liked. Dell also issued a tepid outlook for the current quarter. Goldman Sachs reportedly downgraded the stock.
In the chip arena, Analog Devices (ADI
) reported 32 cents. vs. 43 cents, third-quarter EPS on a 19% sales decline. It sees 32-34 cents fourth-quarter EPS, and expects gross margins to improve modestly.
) posted 41 cents, vs. 3 cents, second-quarter EPS on a 26% revenue rise.
Retailer Kohl's (KSS
) reported 54 cents, vs. 43 cents, second-quarter EPS on 5.1% higher same-store sales and 16% higher total sales. It sees fiscal year 2006 EPS of $2.42-$2.50.
Treasury prices gained, and yields remained subdued, after crude oil topped $67 and prompted some fresh asset allocation out of stocks, says Action Economics. Data proved relatively friendly as well, especially the Michigan sentiment report plunging to 92.7 in Aug from 96.5. This underscored risks to consumption if oil prices continue to take a bite out of the economy -- plunging the curve to fresh cycle narrows, says Action Economics.
The benchmark 10-year yield fell to 4.24%, compared with 4-month highs earlier in the week of 4.43%.
European stock markets finished lower on Friday as oil prices rose above $66. London's Financial Times-Stock Exchange 100 index was down 12.8 points, or 0.24%, to 5,345.8.
Germany's DAX index fell 16.6 points, or 0.34%, to 4,937.33.
In Paris, the CAC 40 index lost 32.62 points, or 0.72%, to 4,476.48 as French second-quarter GDP rose 0.1%, less than the 0.3% anticipated. Also, nonfarm payrolls were unchanged on the quarter.
Asian markets barely budged on Friday.
Japan's Nikkei 225 index closed flat at 12,261.68. The Tokyo stock market took a breather after a steep rise this week. The government said second-quarter gross domestic product (GDP) grew 0.3% in real terms, shy of the 0.5% consensus estimate. Gains in large-cap banking issues bolstered the broader Topix index, led by Sumitomo Mitsui, Mitsubishi Tokyo, and Mizuho Financial.
In Hong Kong, the Hang Seng index closed up marginally at 15,450.95. Gains in CNOOC, Esprit Holdings, and BOC Hong Kong aided the Hang Seng, says Standard & Poor's MarketScope.