Wall Street Ends the Week With Overall Gains
A profit warning from Home Depot halted the New Year’s rally on Wall Street, leaving stocks narrowly mixed Friday amid concerns about consumer spending. But the market’s major indicators ended the week with healthy gains.
Trading was tentative and lackluster, a sharp contrast to the previous session, when the market enjoyed its best day in more than two months after an unexpected jump in manufacturing activity.
Analysts were heartened that despite Home Depot’s warning, the market’s declines Friday were modest.
“The market has held up rather nicely. We have entered the year with people optimistic that we are not going to have a fourth negative year for the overall market,” said Brian Bush, director of equity research at Stephens Inc.
The Dow Jones industrial average closed down 5.83 points, or 0.1%, at 8,601.69, having surged 265.89 points Thursday, its best one-day gain since Oct. 15.
The market’s broader gauges were mixed. The Nasdaq composite index rose 2.23 points, or 0.2%, to 1,387.08. The Standard & Poor’s 500 index declined a fraction of a point, or 0.1%, to 908.59.
Winners led losers by 6 to 5 on the New York Stock Exchange, but declining issues held a 9-to-8 edge on Nasdaq.
The indexes posted gains for the week due to advances in the three previous sessions, including Thursday’s big rally. For the week, the Dow rose 3.6%, Nasdaq climbed 2.9% and the S&P; advanced 3.8%.
All three indexes were down the previous week.
But analysts also said the market needs more upbeat news about earnings and the economy before embarking on another upward trend or breaking its three-year losing stretch.
“A day like [Thursday] is almost an anomaly until sentiment changes and people become more positive,” said Brian Bruce, director of global investments at PanAgora Asset Management.
Investors are particularly sensitive to disappointing news involving consumers, whose spending accounts for two-thirds of the economy.
Home Depot, which late Thursday cited slow holiday sales as it cut its earnings estimates for the fiscal year ending in February, dropped $3.50 to $21.38 on Friday.
Bear Stearns and Deutsche Securities each downgraded Home Depot. Banc of America Securities downgraded rival Lowe’s, which then fell $2.43 to $36.92.
Winners Friday included Walgreen, up $2.06 to $32.16 on quarterly earnings that were a penny a share higher than analysts had expected.
Apparel retailer Kenneth Cole advanced $1.57 to $23.57 after raising its fourth-quarter profit and revenue estimates.
Treasury yields dipped slightly after rising sharply Thursday. The yield on the 10-year Treasury note closed at 4.02%, down from 4.03%.
The dollar, which rose sharply against the yen and euro Thursday, fell against both currencies Friday.
Oil prices surged to two-year highs on fears that the monthlong strike in Venezuela is depleting U.S. supplies. Near-term crude futures rose $1.23 to $33.08 a barrel in New York. Gold also spiked, rising $5.10 to $351.20 an ounce.
In Europe, where indexes posted big gains Thursday, France’s CAC-40 fell 0.2%, Britain’s FTSE-100 slipped 0.1% and Germany’s DAX index lost 0.4%.
Market Roundup, C4-5
