Stocks End Mixed but Mostly Higher as Signals Diverge

Wall Street closed mixed but mostly higher Friday, with Caterpillar’s lackluster profit report dragging down the Dow Jones industrials while Google’s soaring shares led Nasdaq higher.

Friday’s session closed out a turbulent week that raised new concerns about inflation and the outlook for corporate earnings but also saw oil prices at their lowest level since late July.

“I think the market needs a catalyst in order to get out of this difficult environment,” said Michael Sheldon, chief investment strategist at Spencer Clarke in New York. “Hopefully if oil prices continue to decline and move back into the mid-$50s, that could turn sentiment more positive on Wall Street.”

The Dow index slid 65.88 points, or 0.6%, to 10,215.22 on Friday, largely because of the plunge in Caterpillar’s shares. The heavy-machinery giant said third-quarter earnings rose 34% to $667 million, or 94 cents a share, but the results fell short of Wall Street’s average estimate of $1.06.

The company blamed higher raw materials costs and production bottlenecks, and it said those factors would hurt this quarter’s results as well.

In the broader market, however, buyers had control. Rising stocks outnumbered losers by about 2 to 1 on the New York Stock Exchange.

The Standard & Poor’s 500 index added 1.79 points, or 0.2%, to 1,179.59. The Nasdaq composite jumped 14.10 points, or 0.7%, to 2,082.21 as Internet-related shares rode Google’s coattails.

Google rocketed $36.70, or 12.1%, to a record $339.90. The Web search company had reported late Thursday that its third-quarter profit grew more than sevenfold to $381.2 million as revenue nearly doubled amid a surge of new advertising.

Third-quarter earnings overall have been a mixed bag, as the disparity between Caterpillar and Google showed. Still, more than two-thirds of the S&P; 500 firms that had reported results through Thursday surpassed analysts’ estimates, exceeding the 10-year average of 59%, according to Thomson Financial.

One troubling issue is that many companies are struggling with high costs for energy and other raw materials. That is raising concern that more of them will try to pass on those expenses to customers, boosting inflation.

Federal Reserve officials have warned repeatedly in recent weeks that the central bank would continue to raise short-term interest rates to damp inflation. Fear of the Fed, and what tighter credit could do to the economy, has been a big reason blue-chip stock indexes have fallen in five of the last six weeks, analysts say.

This week the Dow lost 0.7% and the S&P; 500 fell 0.6%. Nasdaq, however, gained 0.8%.

Falling energy prices suggest that some relief might be on the way for the economy. The futures contract for December crude oil ended at $60.63 a barrel Friday, up 61 cents, but that was down from the final price of $61.03 on the November contract, which expired Thursday.

For the week, oil dropped $2 a barrel. The price is down from a record high of $69.81 on Aug. 30.

There was good news from the bond market as well: The yield on the 10-year Treasury note ended at 4.38%, down from 4.43% on Thursday and a six-month high of 4.50% on Monday.

“People are looking at 4.5% on the 10-year note as a good level to put some money to work,” said Mitchell Stapley, who oversees $13 billion as chief fixed-income officer at Fifth Third Asset Management in Grand Rapids, Mich.

In other markets highlights.

* Excitement over Google helped lift other Net issues including Stamps.com, up $1.07 to $19.71; Baidu.com, up $4 to $70; and ValueClick, up 92 cents to $17.22.

But what’s good for Google may be bad for traditional media companies. Among newspaper firms, Gannett dropped $1.05 to $62.68 and Tribune, parent of the Los Angeles Times, fell 28 cents to $30.91.

* The tech sector saw another bright spot in flash-memory maker SanDisk, whose quarterly profit almost doubled -- easily beating Wall Street targets -- on revenue growth of 45%. SanDisk soared $10.07 to $56.45.

* Major tech shares were mixed. Intel slid 47 cents to $23.15, Cisco Systems added 10 cents to $17.03 and Microsoft lost 1 cent to $24.78.

* Pfizer slid to a fresh eight-year low, after diving Thursday on a downbeat profit report. The stock fell 65 cents to $21.25. Among other drug issues, Merck lost 74 cents to $26.18 and Eli Lilly fell 55 cents to $50.70.

* Other issues reacting to earnings reports included Reliance Steel, up $2.82 to $52.27; Robert Half International, up $4.94 to $37.35; and Oakley, down $3.20 to $14.04.

* In the industrial sector, Caterpillar’s profit report helped to pull Deere down $1.42 to $57.16 and Cummins down $2.41 to $78.21.

* Phelps Dodge, the world’s second-biggest copper producer, climbed $4.92 to $120.96. The company announced plans to spend $1.5 billion on a share buyback and special dividend.

* 7-Eleven gained $1.52 to $37.36. Seven-Eleven Japan Co. raised its offer for the 27.3% stake in the U.S. unit it doesn’t already own by $5 a share, to $37.50.

* CBOT Holdings, parent of the Chicago Board of Trade, soared $21.11 to $112, its third straight gain after going public Tuesday at $54 a share.