A Mixed Day for Markets
Wall Street held mostly steady Friday despite some light selling on a government report showing the economy at its weakest in eight years and worse-than-anticipated results from JDS Uniphase.
Analysts said the muted response reflects how accustomed investors have become to bad news, given the dismal second-quarter earnings of recent weeks. They also said the market was reassured by indications that the outlook for semiconductor stocks might be improving.
The Dow Jones industrial average closed down 38.96 points, or 0.4%, at 10,416.67 in a quiet session that ended its two-day winning streak.
Broader stock indicators were slightly higher. The Standard & Poor’s 500 index gained 2.89 points, or 0.2%, to 1,205.82, while the Nasdaq composite index rose 6.11 points, or 0.3%, to 2,029.07--its third straight winning session.
Advancing issues led decliners by nearly 6 to 5 on the New York Stock Exchange and by 8 to 7 on Nasdaq. Trading was light.
For the week, the three indexes showed little change despite a massive sell-off Monday and Tuesday that sent the Dow down 335 points. Stocks rallied Wednesday and Thursday, with the Dow ending the week down 115.98 points, or about 1.5%. The Nasdaq was nearly unchanged, falling three-tenths of a point, or less than 0.1%, while the S&P; dropped 5.03 points, or 0.4%.
“There’s no catalyst on the earnings side short term to give us a strong head wind, so we’re stuck,” said Robert Harrington, co-head of listed block trading at UBS Warburg. “The only good thing I can say is that the negative news is not bringing the whole market down.”
Investors continued to pore over earnings reports, looking for indications of where business is headed.
JDS Uniphase was pummeled, falling 92 cents, or 10%, to $8.55 after reporting a quarterly loss and warning of revenue shortfalls ahead. The optical-networking company also announced 7,000 more job cuts--bringing the total for the year to 16,000, or more than half its staff.
The Dow’s losses came from a handful of stocks, including technology bellwethers Intel, which fell 56 cents to $29.22, and Microsoft, which was down $1.12 at $65.47. DuPont, which released disappointing results earlier in the week, also suffered, falling $1.06 to $42.13.
The news was better in semiconductors, a technology business whose recovery is considered a precursor to any technology turnaround. Investors sent LSI Logic up $1.70 to $20.85 after the company said it expects business to bottom out in the current quarter.
But Wall Street had little reaction to a Commerce Department report released Friday that showed the economy slowed to a 0.7% growth rate this spring, the worst performance in eight years, as businesses cut investment spending by the largest amount in nearly two decades.
“There was some relief that the number wasn’t negative . . . that we’re not in a recession, and we’re closer every day to interest rate cuts helping the economy,” said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.
Still, most companies remain unable to say when business will improve. That inability has translated into uncertainty on Wall Street that has kept many investors on the sidelines. The three major stock indexes, the Dow, Nasdaq and S&P; 500, have made little progress since mid-April.
Among other market news Friday:
* US Airways dropped 89 cents to $17.26 after the Justice Department said it would fight to block its proposed merger with United Airlines on the grounds it would “reduce competition, raise fares and harm consumers.” UAL, United’s parent corporation, fell 29 cents to $33.63.
* European markets showed some strength after a rough week. Germany’s DAX index climbed 1.4%, Britain’s FTSE 100 rose 2.2% and France’s CAC-40 gained 2.6%. The Dow Jones Euro Stoxx 50 index rose 2.1%, its second straight gain after hitting a 21-month low Wednesday.
* Bond prices rose after the gross domestic product report kindled hopes of another interest rate cut by the Federal Reserve. The yield on the one-year Treasury bill--which moves opposite its price--fell to 3.40% from Thursday’s close of 3.44%.
