A Winning Week for Stocks Ends Quietly
Stocks were little changed Friday as investors sifted through the first few third-quarter earnings reports for clues to corporate America’s health while looking ahead to next week’s full flood of profit announcements. Oil prices jumped for a second day, possibly portending higher prices at the gasoline pump.
The Dow Jones industrial average dipped 5.33 points, or 0.1%, to 9,674.68. The Standard & Poor’s 500 index was off 0.67 of a point, or 0.1%, at 1,038.06, while the technology-driven Nasdaq composite index rose 3.41 points, or 0.2%, at 1,915.31.
For the week, the Dow rose 1.1%. The S&P; 500 rose 0.8% and Nasdaq rose 1.9%.
It was the second straight winning week for all three indexes, which have been gaining ground since stumbling in mid-September.
Market activity was muted during Friday’s session as many traders took the day off to take advantage of the Columbus Day holiday Monday, when the bond market will be closed.
The stock market was open for a full session Friday and will be open for a regular session Monday. Trading volume was moderate. Winners led losers by 6 to 5 on the New York Stock Exchange; declining stocks held a narrow, 8-7 edge on Nasdaq.
The Labor Department reported that the cost of food pushed wholesale prices up 0.3% in September, well above economists’ forecasts for an unchanged reading. Stripping out the rise in food prices and a small gain in energy costs, wholesale prices were unchanged, below economists’ expectations for a 0.1% rise.
At the New York Mercantile Exchange, crude oil traded at the highest level in nine weeks, buoyed by heavy pre-winter buying of heating oil as the Northeast built its stocks.
Crude oil for November delivery closed 96 cents higher at $31.97 a barrel. Crude advanced more than $2 in two days and nearly $5, or 18%, since the Organization of the Petroleum Exporting Countries decided on Sept. 24 to cut output by 900,000 barrels a day starting Nov. 1.
“There’s this realization that supplies could be tight all winter with OPEC cutting output,” said Phil Flynn, analyst at Alaron Trading.
“We have signs of an improving economy and a cold winter, ingredients for an explosive oil market.”
Gasoline futures rose in tandem, hitting a six-week high on Nymex. Gasoline for November delivery rose 0.92 of a cent to 89.07 cents a gallon, the highest closing price for a near-month contract since Aug. 29. The price rose 4.7% this week.
In past years, dating at least to 1960, such oil price increases have tended to mark the peak of an economic expansion and have been followed quickly by recession, according to Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio. The usual scenario is that rising energy costs spill over into higher prices for other goods, causing consumer spending to slow and the economy to falter.
But this year will be the exception, Chan believes. Big productivity gains and firms’ lack of pricing power -- their inability to pass along rising energy costs -- have reduced the spillover effect and thus have left consumers with a reservoir of spending power, the economist said.
On Wall Street, GE weighed on the Dow Jones industrial average after the conglomerate posted third-quarter earnings in line with analysts’ estimates but cut its fourth-quarter earnings guidance, blaming weak demand for gas turbines and higher costs at its plastics division. GE fell 81 cents to $29.32.
Chip stocks rose after Deutsche Bank Securities raised its ratings on Texas Instruments and Intel.
Intel rose 66 cents to $30.43 and TI gained 49 cents to $25.48. The SOX index of semiconductor stocks rose 1.2%.
In other trading, the dollar continued its recent slide against the yen and euro, falling to 108.51 yen, down from 109.15 Thursday, while the euro rose to $1.181 from $1.174.
The yield on the benchmark 10-year Treasury note fell to 4.25% from Thursday’s close of 4.29%.
