In another volatile trading session, the major stock indexes ended down Friday as investors digested two grim economic reports: one related to the housing market, the other consumer confidence.
Today's Markets
At the 4 p.m. market close in NewYork, the Dow Jones Industrial Average fell 127.20 points, or 1.42%, to 8852.06. The broader S&P 500 Index was down 5.94 points, or 0.63%, to 940.49, while the Nasdaq Composite fell 6.42 points, or 0.37%, to 1711.29. The consumer-friendly Fox 50 Index slipped 6.54 points, or 0.91%, to 710.65.
The Dow veered back and forth, covering a range of nearly 600 points. Drug maker Merck (MRK),food company Kraft (KFT) and four others led gains, while 24 Dow components ended lower.
Despite Friday's loss, the Dow closed up for the week - the first time in five weeks. A 900 point surge on Monday and another 400 points on Thursday took care of that. Those gains were nearly offset by a Wednesday drop of more than 700 points.In all, the Dow gained 4.75% this week.
In the commodity markets, oil was up $2.23 to $72.09 a barrel, while gold was down $18.10 to $786.50 ounce.
Many long-term investors, notably billionaire Warren Buffett, have said stocks may continue to trend lower, but long-term bargains are out there and that some stocks look attractive.
In an Op-Ed piece in The New York Times, Buffett said he has been buying U.S. companies for his personal account. "I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up," he wrote.
The biggest weight on Friday's market were two economic reports.
The U.S. Commerce Department said housing starts and building permits fell for the third month in a row.
Another disappointing economic report was related to consumer confidence. The University of Michigan consumer confidence survey fell to a historical low of 57.5 in mid-October, down from the September reading of 70.3. The fall is directly related to the ongoing financial crisis.
The Michigan survey is watched closely by investors, especially near the end ofyear as the holiday shopping season begins since consumers will not shop without confidence that the economy will recover.
As it has been the case all week, volatility remained high across all the major stock, bond and commodity markets. The VIX, a measure of volatility often referred to asWall Street's "fear gauge," was up 5 points to a near-record high of 73.50.
“Traders are just jumping in and then jumping out an hour later," said David Henderson, a floor trader at the NewYork Stock Exchange. "People aren't interested in finding investments - they just want short term trades."
Technology Stocks
The technology companies traded heavily after giants Google (GOOG) and IBM (IBM) posted earnings Thursday afternoon.
For its third quarter ended September 30, Google reported net income of $1.35 billion or $4.24 a share, compared with net income of $1.25 billion or $3.92 a share in the year ago third quarter. Excluding items Google had earnings of $4.92 a share. Analysts, according to Thomson Reuters had expected Google to post earnings of $4.76 a share and revenue of $4.06 billion. Shares of Google were trading up 7% in early-market trading.
IBM (IBM), which preannounced its earnings last week, officially said its net income rose to $2.8 billion, or $2.05 per share, from $2.36 billion, or $1.68 a share, a year earlier. Shares of IBMwere mostly flat.
Technology heavyweights like Apple (AAPL), Research in Motion (RIMM) and Qualcomm (QCOM) were all trading broadly lower.
Company News
United Parcel Service, commonly known as UPS (UPS), said it will raise its shipping rates in 2009 by 5.9% for ground and 4.9% for air shipping.
Honeywell (HON), the diversified industrial conglomerate and former Dow component, said it earned a third quarter profit of $719 million, or 97 cents a share, up from $618 million, or 81 cents a share, from a year ago.
Oil company Schlumberger (SLB) reported a profit of $1.53 billion, or $1.25 a share, up from $1.35 billion, or $1.09 a share, from a year ago.That matched the profit expectations of analysts interviewed by Thomson Reuters.
General Motors (GM) and privately-held Chrysler are accelerating merger talks amid strong support from potential lenders, according to a report in The Wall Street Journal.
Drug giant Pfizer (PFE) has agreed to settle litigation related to the pain drugs Celebrex and Bextra. Pfizer will pay $894 million, the bulk of that will go to personal injury claims.
Nasdaq Stock Market (NDAQ) will replace the department store Dillard's (DLS) in the S&P 500.
Global Markets
The Dow Jones Euro Stoxx 50 Index, the gauge that tracks the 50 largest companies in Europe, closed up 108.37 points, or 4.47%, to 2532.17.In London, the FTSE100 gained 201.62 points, or 5.22%, to 4063.01.
In Asia, Japan's Nikkei rose 235.37 points, or 2.78%, to 8693.82. HongKong's Hang Seng dropped 676.31 points, or 4.44%, to 14554.21.
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