The bulls battled the bears to a draw on Friday as stocks ended mixed on disappointing earnings reports from Microsoft and American Express.
Today’s Markets
The Dow Jones Industrial Average closed up 23.95 points, or 0.26% at 9093.24, the Standard & Poor's 500 rose 3.02 points, or 0.31%, to 979.31 and the Nasdaq Composite dropped 7.64 points, or 0.39%, to 1965.96. The consumer-friendly FOX 50 fell 1.31 points, or 0.18%, to 715.57.
Wall Street had an amazing run this week, but the rally stalled on Friday. The Nasdaq Composite was up 12 days in a row before retreating today and the Dow plowed through the 9,000 mark for the first time since January this week.
Microsoft (MSFT) shares plunged in heavy trading after the company reported its first drop in annual sales since the company went public in the early 1980s.
Microsoft said fiscal fourth-quarter income fell 29% to $3.05 billion, or 34 cents a share, two cents shy of the 36 cents expected by analysts. Revenue fell 29% from a year ago to $3.11 billion.
The software maker's shares dragged down several other technology companies, including Intel Corp. (INTC), Dell (DELL), and Dow member Hewlett-Packard (HPQ). Online retailer Amazon.com (AMZN) shares were also down 7% after disappointing earnings last night as well.
Shares of American Express (AXP) fell after the company reported Thursday second-quarter net income were 27 cents a share, one cent higher than analysts' estimates. However the company said revenue for the quarter was $6.1 billion, well short of the $6.3 billion expected by analysts.
Despite the major drop in Microsoft and AmEx, stocks were only moderately lower - a sign on how bullish Wall Street traders have been since the start of earnings season.According to Thomson Reuters, 76% of the companies who have reported this earnings season have beaten analysts' expectations.
Traders said as long as there aren't any major red flags in the economy or in company reports, the market may continue to trend higher at least in the near term.
"You can't ignore a 11% move in stocks in nine days, this has been an incredible market," said NYSE trader Doreen Mogavero. "I think everyone is starting to feel a whole lot better."
Wall Street also got a University of Michigan consumer sentiment that showed consumer sentiment dropped for the first time since February. The Reuters/University of Michigan consumer sentiment fell to a reading of 66.0, from 70.8 in June. The drop was less than the reading of 64.6 expected by economists, according to Thomson Reuters.
For commodities, oil was up 84 cents at $68.02 a barrel while gold fell $3.10 to $951.70 a troy ounce.
Company News
Citigroup (C) announced the appointment of three new members to its Board of Directors on Friday, including the former superintendent of the New York State Banking Department. In a statement, Citigroup said that Diana Taylor, Timothy Collins and Robert Joss would join the now 17-member board, of which only Citigroup CEO Vikram Pandit is a member of the company’s management.
Black& Decker (BDK) said it earned 63 cents a share, much better than the 37 cents expected by analysts. Sales fell 24% during the quarter, and expects that the decline will continue throughout the year.
Oil driller Schlumberger (SLB), said it earned $613 million, or 51 cents a share, as revenue decreased 18% to $5.53 billion, primarily on lower oil revenues and a decrease in profit margin. The latest quarter included 17 cents in restructuring charges. On an adjusted basis, Schlumberger beat the 63 cents expected by analysts, but fell short on the revenue side.
Amazon.com (AMZN) saw its profit decline 10% to $142 million, or 32 cents a share, from $158 million, or 37 cents a share, a year earlier. While sales rose to $4.65 billion from $4.06 billion a year ago, the results were impaired partially on a big drop in video game sales and other high-margin goods.
Fortune Brands (FO), the maker of Moen faucets and Maker's Mark whiskey, reported a second-quarter adjusted profit of 70 cents a share, two cents better than what the Street was looking for. Sales for the quarter came in at $1.74 billion. Fortune, which also makes Titleist golf balls, said they are seeing lower discretionary spending in all its divisions, most notably in home products and golf.
Heavy industry company Ingersoll-Rand (IR) said it earned an adjusted 50 cents a share, well above the 39 cents a share predicted by Wall Street analysts surveyed by Thomson Reuters.
The Wall Street Journal reported that JPMorgan Chase & Co. (JPM) will increase salaries for its investment bankers, in an effort to make their compensation more competitive with rivals. The changes would be implemented in 2010, with details will being announced later this year. While employees would get a bigger salary, bonuses will probably decrease, keeping the level of salaries similar to previous years.
Global Markets
In London, the FTSE 100 Index closed up 0.37% to 4576.61 while Paris' CAC 40 gained 0.22% to 3366.45 and Germany's DAX gained 0.34% to 5229.36.
In Asia, Japan's Nikkei gained 1.55% to 9944.55 while Hong Kong's Hang Seng rose 0.83% to 19982.79. China's Shanghai Composite jumped 1.33% to 3372.60.
Wall St. seeks to extend rallyRed-Hot Stocks Cool Off
