|
|
|
|
| Current News | News Archive | Search News |
Wall Street takes a breather |
| by By Alexandra Twin and David Ellis, CNNMoney.com staff writers - 04/27/2007 |
 |
| |
"Major gauges little changed after record highs, investors mull GDP weakness and strong Microsoft earnings.
" |
| |
NEW YORK (CNNMoney.com) -- Stocks paused from their recent runup Friday afternoon, just a day after closing at an all-time high, as a weaker-than-expected GDP report outweighed more bullish earnings numbers from companies such as Microsoft.
The Dow Jones industrial average (up 17.80 to 13,123.30, Charts) edged higher with two-and-a-half hours remaining in the session. The blue-chip barometer finished the previous session at a record high for the second straight day.
Video More video
Thinking about getting into the stock market? Know the basics first.
Play video
Both the broader S&P 500 (up 0.90 to 1,495.15, Charts) index tech-laden Nasdaq composite (up 2.42 to 2,556.88, Charts) inched lower. The two indices ended the previous session at more than 6-year highs.
Oil prices climbed and gold prices rose. The dollar slumped to the lowest level ever against the euro before easing back a bit and also fell against the yen.
After reaching new highs Thursday, the major stock gauges struggled for direction Friday as investors sorted through the GDP report's many components and welcomed another batch of strong earnings.
GDP growth slowest in 4 years
Gross domestic product growth, the broadest measure of the nation's economy, grew at a slower-than-expected 1.3 percent annual rate in the first quarter, the government said. It was the slowest pace in four years and reflected the impact of the weak housing market.
The report's inflation components also rose more than expected.
The broad message of the report seemed to be slower growth paired with still-high inflation - a message that is not very friendly to stock investors.
However, the market reaction was pretty mild, with "the stock and bond markets saying 'there's no news here,'" said Jonathan Golub, U.S. equity strategist at JP Morgan Asset Management.
Investors have been pretty well alerted to the reality of slower growth and ongoing pricing pressure, due to recent economic reports and comments from Chairman Ben Bernanke and other Federal Reserve.
In addition, Golub said that within the report, beyond the headline number, there were some encouraging signs for the future, which may have tempered some of the negatives. Those signs include relative strength in the report's consumer and business spending components, which could mean the next few quarters of GDP growth won't be quite as sluggish as has been feared.
One concern about the housing slump has been that it will drag on spending, as the refinancing boom had served to put money in the hands of consumers. So the stronger consumer number was encouraging, Golub said. At the same time, if the consumer is slowing down, it's important to see that the corporate side is picking up some of the slack.
Overall, the stock market reaction was pretty positive, suggesting investors were absorbing some of the underlying indications. "I would have expected people to miss the details," Golub said. "But they didn't just read the Cliff's Notes, they read the book."
The revised reading on consumer sentiment from the University of Michigan provided some support to stocks after the final April reading was revised upward to 87.1 in April, topping forecasts.
Stock investors continued to welcome stronger-than-expected first-quarter earnings, with the latest coming from Dow stock and tech bellwether Microsoft (up $1.17 to $30.27, Charts, Fortune 500) after the close Thursday.
Microsoft reported higher quarterly sales and earnings that topped estimates, sending shares 4.5 percent higher Friday morning.
In other news, Dow stock General Electric (up $1.11 to $36.95, Charts, Fortune 500) rose after a Citigroup analyst said that the company should spin off NBC and several other units to give more focus to the company.
Trouble ahead for private equity sellers
Burger King (up $0.60 to $23.32, Charts) shares rose after the world's No. 2 hamburger chain reported better-than-expected quarterly profit versus a year ago loss, helped by strong demand for a new, cheaper breakfast menu and new burger offerings.
Goodyear (up $2.22 to $34.72, Charts, Fortune 500) shares jumped after the largest U.S. tire manufacturer announced plans to step up its cost-cutting.
On Semiconductor (up $0.99 to $11.37, Charts) reported higher quarterly earnings that met estimates on higher quarterly revenue that beat estimates. Shares jumped 7 percent in unusually active trading.
With 61 percent of the S&P 500 having reported, first-quarter earnings are currently on track to have risen 6.8 percent from a year ago, according to the latest Thomson Financial estimates.
Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 841 million shares. On the Nasdaq, decliners topped advancers by nearly 2 to 1 on volume of 1.29 billion shares.
U.S. light crude oil for June delivery rose 71 cents to $65.77 a barrel on the New York Mercantile Exchange.
COMEX gold for June delivery rose $1.50 to $679.50 an ounce.
Treasury prices were mostly flat with the yield on the 10-year note at 4.69 percent, unchanged from late Thursday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar slipped to an all-time low against the euro before paring some of its losses and also fell versus the yen.
|
| |
|
|
