Dow struggles with weak profits, but Google lifts tech
NEW YORK -- Investors' ambivalence about earnings reports gave Wall Street a mixed performance Friday.
Traders pounced on companies showing signs of life and dumped companies whose quarterly results fell short of expectations. Better-than-forecast results from Google helped technology shares while lackluster numbers from General Electric reinforced investors' concerns about the depths of the recession.
Stocks ended a volatile session well off their lows. A sizable comeback Friday was the latest back-and-forth seen throughout a turbulent week; the Dow tumbled 4% Tuesday, jumped 3% Wednesday and fell again Thursday. Volatility has been more the rule than the exception in recent trading as investors sort through a plethora of wide-ranging earnings reports.
"I think we had a lot of bad news to absorb and stocks did OK," said Thomas J. Lee, equities analyst at JPMorgan, referring to the week's performance.
The Dow industrials fell 45.24, or 0.56%, to close Friday at 8,077.56. The Dow had been down more than 200 points early in the day and briefly moved into positive territory.
Broader stock indicators rose. The Standard & Poor's 500 index rose 4.45, or 0.54%, to 831.95, while the Nasdaq composite index rose 11.80, or 0.81%, to 1,477.29.
For the week, the Dow is down 2.46%, the S&P 500 is down 2.1% and the Nasdaq is ending off 3.4%.
The results from GE weighed on industrial names. The company's results met Wall Street's lowered expectations but investors grew worried that GE will reduce its dividend. They are also nervous the company could lose its coveted "AAA" credit rating because of the recession that has crimped lending at GE Capital and hurt its industrial and entertainment businesses. GE fell 11%.
Insurer Aflac helped ease some of Wall Street's concerns about the financial industry after reassuring investors it had more than enough cash to maintain its credit ratings. The company's stock tumbled 37% Thursday on reports it did not have adequate capital to cover risky investments. The company issued a statement and an analyst released a research note backing the company's financial position. Aflac rose 6.9%.
Reports from a range of industries gave fresh evidence of the toll the weak economy is taking and sent markets sputtering out of the gates: Copier and printer maker Xerox fell 7.4% after its results fell short of projections. Capital One Financial, which focuses on credit card lending, reported a loss rather than the profit Wall Street expected after it set aside money to cover bad debt. The stock lost 12%.
And Harley-Davidson said it will cut jobs and reduce shipments because of falling demand. The company's earnings for the final quarter of 2008 fell nearly 60%, sending the stock down 7.3%.
In other corporate news, The Wall Street Journal is reporting drug maker Pfizer is in talks to acquire rival Wyeth in a deal valued at more than $60 billion. Citing unidentified sources, the Journal said the discussions have been going on for months, but a deal is not imminent. Wyeth jumped $4.94, or 12.7%, to $43.77, while Pfizer fell 2 cents to $17.19.
Meanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.62% from 2.60% late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.10% from 0.09% late Thursday.
The dollar was mostly higher against other major currencies, and gold prices rose.
Light, sweet crude jumped $2.80 to settle at $46.47 a barrel on the New York Mercantile Exchange.
Overseas, Britain's FTSE 100 rose 0.01%, Germany's DAX index fell 0.96%, and France's CAC-40 lost 0.71%. Japan's Nikkei stock average fell 3.81%.