By Corrie Driebusch
U.S. stocks rose Friday, on track for their second weekly gain
in a row, as General Electric Co.'s plans to exit most of its
lending operations buoyed the Dow industrials and S&P 500.
The Dow Jones Industrial Average rose 76 points, or 0.4%, to
18034. The S&P 500 added 8.5 points, or 0.4%, to 2100 and the
Nasdaq Composite gained 16 points, or 0.3%, to 4990.
General Electric's shares surged 8.6% on Friday, leading the Dow
and S&P higher. GE has resolved to part ways with the bulk of
finance business GE Capital, and will sell or spin that part off
over the next two years. The conglomerate has agreed to sell $26.5
billion worth of office buildings and commercial real estate debt
to buyers including Blackstone Group LP and Wells Fargo &
Co.
GE's stock started rising Thursday on The Wall Street Journal's
report that the company was close to selling all or part of its
real estate holdings. Shares ended the session up 2.9%, making it
one of the top contributors to the Dow.
On Friday, GE's gains added about 15 points to the Dow.
Recent stock-market moves have been muted. The Dow and the
S&P 500 haven't had a daily 1% move so far this month, and
equity-trading volumes have been below average in recent
sessions.
"The past couple of weeks, it's like we're in a washing machine.
There's a lot of agitation but we're not going anywhere," said
Anwiti Bahuguna, senior portfolio manager at Columbia Threadneedle
Investments, which manages $506 billion.
Many investors view earnings season, which kicked off this week,
as the next potential catalyst for the stock market. These money
managers say they are waiting for first-quarter results and
guidance from companies before making any shifts to their equities
portfolios.
Economic data has suggested the U.S. economy hit pause in the
first quarter, and that, combined with a strong dollar and its
potential effect on profits at multinational companies, along with
weak commodity prices, has analysts expecting a decline in
first-quarter earnings. Companies in the S&P 500 are set to
report a 5% decline in first-quarter earnings, the worst quarterly
showing since 2009, according to FactSet.
"We expect energy company earnings to come down, and we expect
companies with international exposure to face headwinds, but what
we want to see is did they overshoot in their expectations for
downgrades?" said Ms. Bahuguna.
Despite these challenges, major stock indexes were on track to
post their second week of gains in a row. The Dow has gained 1.1%
this week, through Thursday's close, after rising 0.3% in the prior
week. The S&P is up 1.2% so far this week, after posting a gain
of 0.3% in the previous week. The Dow is now 1.8% below its record
of 18288.63, while the S&P is 1.2% away from its all-time high
of 2117.39.
This week's gains were driven by the energy, industrials and
health care sectors. The industrials gains were due in large part
to the move higher by GE, while energy shares were boosted by a
rebound in the price of oil. Crude-oil futures, which gained 1.9%
to $51.75 a barrel on Friday, were up more than 5% over the past
week.
The health-care sector continues to be a standout. So far this
year shares of health-care companies in the S&P 500 are up
roughly 8%, making it the best performing sector in the index. In
the past year shares are up more than 31%.
Even with these big gains, many investors still see the sector
as having room to run.
"Over the next year and longer health care is very attractive,"
said David Klaskin, chief investment officer at Oak Ridge
Investments, which manages $4.7 billion. He said he anticipates
more merger-and-acquisition activity in the health-care field to
lift the sector.
"Small-cap biotech is really creating another stool for growth
for large-care health care," he said. "I don't think we're in a
bubble."
This past week European stocks rose sharply. The Stoxx Europe
600 climbed further into record territory, up 0.9% on Friday,
putting its weekly gain at 3.8%. Germany's DAX rose 1.7% to a
record close, and France's CAC 40 added 0.6%. The euro fell to
$1.0632 from $1.0660 on Thursday.
In commodity markets, gold futures added 0.9% to $1204.20 an
ounce.
The yield on the 10-year Treasury note was at 1.950%, compared
with 1.957% on Thursday. Yields fall as prices rise.
In other corporate news, Citrix Systems cut its first-quarter
profit and sales outlook, noting the negative impact of a strong
U.S. dollar. Shares fell 2%.
Gap Inc. said its same-store sales for March rose more than
expected on strong sales at Old Navy Stores, but shares fell 3.6%
as the namesake chain logged an "extremely disappointing"
same-store sales drop from a month prior.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
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