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Capping off the S&P 500's best February since 1998, Wall Street squeaked out a mini rally on Friday as the bulls continue to wave off mixed signals on the tepid economic recovery, this time in the form of a surprise decline in existing home sales and a drop-off in consumer sentiment.
Today's Markets
The Dow Jones Industrial Average rose 4.23 points, or 0.04%, to 10325.26, the Standard & Poor's 500 gained 1.55 points, or 0.14%, to 1104.49 and the Nasdaq Composite picked up 4.04 points, or 0.18%, to 2238.26. The FOX 50 added 0.82 points, or 0.10%, to 798.23.
Despite the slight gains on Friday, Wall Street still ended the week in the red, breaking its two-week losing streak. But the losses -- 77 points on the Dow -- were minimal, especially considering the week's ominous economic headlines: weak consumer confidence, a record low in new home sales and a three-month high in jobless claims.
The economic picture was more mixed on Friday as an industry group said existing home sales in January unexpectedly fell and a survey showed consumer sentiment fell slightly in February but the government said the economy grew in the fourth quarter at its fastest pace in six years.
However, it's hard to put too much stock into Friday's action as trading volume on the New York Stock Exchange was extremely light, mostly due to the snow storm slamming the Northeast.
“Today is a snow day. But every time the market does better the volume tends to dry up. That really sends a pretty negative signal,” NYSE trader Ted Weisberg of Seaport Securities told FOX Business. “I think the underlying trend though remains positive.”
Half of the Dow's 30 components headed higher, led by JPMorgan Chase (JPM) and General Electric (GE). On the other hand, Kraft (KFT) and McDonald's (MCD) posted modest losses.
February proved to be a very bullish month on Wall Street as the S&P 500 soared 2.85% -- its strongest month since November and best February since 1998 -- despite renewed concerns about the sustainability of the economic recovery and worries about Greece's debt crisis infecting the global economy.
Stocks hit session lows on Friday after the National Association of Realtors said existing home sales fell 7.2% last month, halving December's 16.2% plunge but also widely missing estimates for a 1% rise. The industry group said supplies fell 0.5% and the median price was unchanged from a year ago at $164,700. However, shares of home builders such as Lennar (LEN) and KB Home (KBH) avoided a selloff and the broader markets climbed out of the red.
The ugly housing figures nearly overshadowed an upbeat, albeit backwards-looking, report on fourth-quarter gross domestic product. The Commerce Department upped its fourth-quarter GDP estimate to 5.9%, surprising analysts who had expected the government to keep its estimate at 5.7%.However, the government cut its consumer spending estimate to reflect a 1.7% rise, a concerning data point for an economy that relies on consumer spending to drive 70% of GDP.
Also on the consumer front, the Reuters/University of Michigan consumer sentiment index rose to a 73.6 reading in February, falling shy of estimates for a 74 reading and below January's 74.4 reading. However, the data did not show the same level of deterioration that this week's Conference Board consumer confidence index revealed. The current conditions index of the sentiment data jumped to the highest level since March 2008.
Manufacturing stocks performed well as the Chicago Purchasing Management Index rose in February to a better-than-expected 62.6 reading, up from 61.5 in January.
Meanwhile, commodities headed north as the U.S. dollar fell solidly against the euro. Capping off its best month since May 2009, crude oil rose $1.49 a barrel, or 1.91%, to $79.66. Gold, which slid 3.3% in February, gained $10.50 a troy ounce, or 0.95%, to $1118.30.
Corporate Movers
American International Group (AIG) posted a massive fourth-quarter loss of $9.8 billion loss, or $90.48 a share, amid heavy loan payback charges. The giant insurer that has been a headache for regulators also warned it may need more U.S. government aid.
Citigroup's (C) board of directors is slated to shrink from 17 to 15 but could see a high-profile new addition: former Mexican President Ernesto Zedillo. Citi said Zedillo will stand for election in April, when directors Michael Armstrong, Ann Mulcahy and John Deutch are set to step down.
CKE Restaurants (CKR) reached a $928 million buyout agreement with Thomas H. Lee Partners that places a 24% premium on its stock but the parent of Hardee’s and Carl’s Jr. said it will solicit higher bids for the next 40 days. Under the deal, which includes the assumption of about $309 million of CKE debt, shareholders of the restaurant operator will receive $11.05 a share in cash for each share of common CKE stock they own.
Crocs (CROX) tumbled 10% as the footwear company’s better-than-expected fourth-quarter results were overshadowed by the departure of CEO John Duerde. COO John McCarvel is set to assume the top job on March 1. Crocs beat the Street in the fourth quarter on bottom and top lines and also issued a bullish first-quarter outlook.
Global Markets
U.K.'s FTSE 100 gained 1.45% to 5354.52, France's CAC 40 rose 0.82% to 3708.80 and Germany's DAX rallied 1.20% to 5598.46.
In Asia, Japan's Nikkei 225 advanced 0.24% to 10126.03 and Hong Kong's Hang Seng jumped 1.03% to 20608.70 but China's Shanghai Composite fell 0.28% to 3051.94.
Jobless claims reflect weak recoveryNew Home Sales Drop 11.2% in January, Record Low
