Stocks Buoyed by Economic Data
Wall Street ended a bullish week with a modest advance Friday as strong economic data encouraged investors and sent the Standard & Poor’s 500 index to a four-year high for the second straight session.
Government economic reports were unabashedly positive, just as they were Thursday. The Labor Department’s producer price index, which measures inflation in wholesale prices, was flat in June.
In addition, the Federal Reserve reported that industrial production surged 0.9% in June, the biggest jump in 14 months. And business inventories rose by a meager 0.1% in May, according to the Commerce Department, meaning that sales were brisk and businesses weren’t stuck with large inventories.
But some analysts said the week’s move higher might have been overdone -- the Dow Jones industrials gained 1.8%, for example -- and predicted that a sell-off was imminent.
“If you look around, is this economic data really worth the jump we had?” asked Bill Groenveld, head trader at VFinance Investments. “I don’t think so, and that means we’ll probably have to have a pullback at some point. We still have oil out there, and we still have the Fed.”
After spending most of the session Friday in negative territory, the Dow rose 11.94 points, or 0.1%, to 10,640.83. It was the index’s best close since March 16.
Broader indexes ended modestly higher after also trading lower much of the day. The S&P; 500 added 1.42 points, or 0.1%, to 1,227.92, highest since July 2001.
The Nasdaq composite gained 3.96 points, or 0.2%, to 2,156.78, beating the previous session’s 2005 high.
The Russell 2,000 small-stock index edged up 0.72 point, or 0.1%, to 663.74 after falling for three straight sessions.
But advancing issues barely outnumbered decliners on the New York Stock Exchange and on Nasdaq.
Positive inflation data, reports of robust June retail sales and a drop in oil prices combined to give Wall Street a strong week. The S&P; climbed 1.3% over the five days; Nasdaq rose 2.1%.
Meanwhile, bonds traded in a narrow range for much of Friday. The yield on the 10-year Treasury note slipped to 4.17% from 4.18% on Thursday.
Crude oil futures rose as investors worried about potential damage from Hurricane Emily to oil facilities in the Gulf of Mexico. A barrel of light crude settled at $58.09, up 29 cents, in New York trading.
The S&P; and Nasdaq have been up for seven straight sessions, and the Dow has climbed six of the last seven trading days.
The market’s focus next week will be on the next wave of corporate earnings reports and on Fed Chairman Alan Greenspan’s testimony before Congress on Thursday, analysts said.
In other market highlights Friday:
* Electronic Arts lost $2.86 to $57.46. The largest U.S. maker of video games delayed the release of “The Godfather” video game until early next year because the company needed more time to develop it. Electronic Arts had planned to sell the video game this year.
* McDonald’s rose $1.39 to $30.99 for the best performance among Dow components. The company said in a preliminary statement that second-quarter earnings were 42 cents a share. Excluding some items, profit was 51 cents. McDonald’s was expected to earn 48 cents, according to analysts in a Thomson First Call survey.
* Franklin Resources slumped $1.75 to $82. The San Mateo, Calif.-based company -- the largest publicly traded U.S. mutual fund company by stock market value -- said Thursday that President and co-Chief Executive Martin Flanagan would leave to become CEO of rival fund company Amvescap.
* A gauge of retailers added 0.7% and was the second-biggest contributor to the S&P; 500’s gain among two dozen industry groups. Home Depot advanced 57 cents to $41.61.
