Stocks Shrug Off Warnings on Intel, Gillette
Stocks closed mostly higher Friday in heavy trading tied to futures and options expirations, as profit warnings regarding Intel and Gillette failed to dash the renewed investor optimism of recent days.
The Dow industrials traded in a narrow range and ended up 13.93 points at 10,855.56. For the week the Dow surged 3.5%.
The Nasdaq composite added 0.8% Friday, extending its gain for the week to 4.7%.
New York Stock Exchange volume topped 900 million shares as complex trades involving options and futures contracts were unwound, though with little volatility.
Stocks rose even as bond yields edged up after tumbling in recent sessions. The yield on the 30-year Treasury bond closed at 5.97%, up from 5.96% Thursday but down from 6.16% a week ago.
Shorter-term yields had a bigger reversal Friday. The 2-year T-note yield ended at 5.56%, up from 5.49% Thursday but still down from 5.69% a week ago.
Yields tumbled this week as investors got good news on inflation and after Federal Reserve Board Chairman Alan Greenspan indicated Thursday that the central bank plans only a modest interest-rate rise to slow the economy.
“We’re optimistic” the Fed will only raise rates once, at its June 29-30 meeting, said Roger Early, money manager at Delaware Investments in Philadelphia.
For stocks, “A sense of order has returned” to the market, said Timothy Stevenson, a money manager at First Union Corp. in Charlotte.
Worries about rates had pushed the Nasdaq index down nearly 10% recently. Now the index is just 3.4% below its record reached April 26, and is up 16.9% year-to-date. The Dow is up 18.2%.
Analysts are looking ahead to strong second-quarter earnings reports from many companies.
But concern is growing about results for some blue-chip firms.
Gillette dove $5.13 to $42.19 Friday after the company warned of disappointing results this quarter because of slower foreign sales.
And Intel sank $3.06 to $54.94 on concerns that delays in rolling out new versions of Intel processors will reduce profits near term. Morgan Stanley Dean Witter analyst Mark Edelstone said a two-month delay in new versions of the top-of-the-line Pentium III chip could foreshadow more problems as the company shifts to new technology.
Still, among major companies overall, “We are going to see some pleasant surprises, and that will be the norm, not the exception” in earnings said Arthur Hogan, chief market analyst at Jefferies & Co.
Among Friday’s highlights:
* Most tech stocks were higher. Adobe Systems shot up $8.69 to $82.56 on the heels of its strong earnings report. Other gainers: Microsoft, up $2.13 to $85, its highest price since April 26; and Cisco Systems, up $2 to $119.38.
* Weak growth stocks included Amgen, down $2.38 to $53.06, and McDonald’s, down 69 cents to $42.
* Pacific Sunwear surged $2.50 to $35.13. Analyst David Turner at Ferris Baker Watts said officials told him the company will continue to perform well, despite the announcement from rival Wet Seal of weak sales in California.
