By Donna Kardos Yesalavich
U.S. stocks eked out tiny gains Friday on weak volume as the
market attempted to extend this week's winning streak ahead of the
second-quarter reporting season.
The S&P 500 Index and the Dow Jones Industrial Average are
on pace for the biggest weekly gain in nearly a year, with each of
the benchmarks up about 4.7%.
In a quiet session following data on U.S. wholesale inventories
that sent mixed messages, investors turned their focus to
expectations for what second-quarter reporting season, which kicks
off Monday with results from Alcoa (AA), will show.
The Dow industrials (DJI) climbed nearly 5% this week, thanks in
part to investors' hopes that the market's recent drop to 2010 lows
may have exaggerated effects anticipated on corporate earnings from
the slumping euro and slower global growth. However, investors are
hesitant to push stocks up much more before the reports begin.
"Earnings season is really going to determine whether this
market continues to rally like the last few days or whether this
rally turns around and fades away," said King Lip, chief investment
officer at Baker Avenue Asset Management. "The concern is, what is
the outlook for Q3 and Q4?"
The Dow edged up 3 points to 10,141 in recent trading.
Among individual blue chips, Alcoa rose 0.8% ahead of the
aluminum giant's Monday report, while Caterpillar (CAT) was also
strong, up 1.7%, and Chevron (CVX) climbed 1.6% as crude-oil
futures climbed to nearly $76 a barrel.
Offsetting the Dow's gainers, Johnson & Johnson (JNJ) fell
1.4%, Pfizer (PFE) slipped 1% and Procter & Gamble (PG)
declined 0.8%.
The Nasdaq Composite (RIXF) rose 0.3% to 2,180, bolstered in
part by a 1.8% jump in Google (GOOG). The company said the Chinese
government renewed a license it needed to continue using its
Chinese Web address, marking a compromise between the company and
Chinese regulators since Google decided to stop cooperating with
censorship requirements.
The S&P 500 (SPX) added 0.2% to 1,072. The materials sector
led the measure's gains while consumer-staples and health-care
stocks fell.
Data released Friday showed inventories of U.S. wholesalers rose
0.5% in May, in line with expectations, as warehouses were
restocked with machinery and other durable goods. However, sales of
U.S. wholesalers registered their first decline in 14 months,
showing a 0.3% slip.
Investors noted that while the rise in inventories is seen as
lifting economic growth, the data also indicates demand is
waning.
Overseas, the Bank of Korea unexpectedly raised interest rates
from record lows. Markets were surprised by the rate increase, but
Seoul shares ended higher on the view that the central bank was
sending a vote of confidence in Korea's recovery.
Meanwhile, European Central Bank President Jean-Claude Trichet
stepped up his warnings to governments to reduce their borrowing
before they lose the confidence of electorates and financial
markets.
The euro (CUR_EURUSD) fell to $1.2644, from $1.2692 late
Thursday in New York. The U.S. Dollar Index (DXY) edged up 0.2%.
Treasurys slipped, pushing the yield on the 10-year note (UST10Y)
above 3%, up to 3.06%. Gold futures climbed.
Among stocks in focus, Madison Square Garden (MSGNV) fell 3.7%
after basketball star LeBron James late Thursday confirmed reports
that he will join the Miami Heat, rather than the MSG-owned New
York Knicks.
Lawson Software (LWSN) slipped 3.5%. The business-software
maker's fiscal fourth-quarter earnings fell 30% and the company
projected first-quarter earnings and revenue below analysts'
estimates.
"The market is definitely on edge today," said Paul Larson,
equities strategist at Morningstar. "Investors' psyche right now is
very fragile because everyone is very sensitive to the possibility
that the economy may enter a double dip."
Overseas, uncertainty over Japan's Upper House elections this
weekend weighed. If the government loses, the country's recent
fiscal discipline could be at stake, putting Japan at risk of a
sovereign debt crisis of its own.
The Bank of Korea unexpectedly raised interest rates from record
lows. Markets were initially jolted by the rate increase, which
only one economist of 15 had predicted in a Dow Jones Newswires
survey. Still, Seoul shares ended higher on the view that the
central bank was sending a vote of confidence in Korea's
recovery.
Meanwhile, European Central Bank President Jean-Claude Trichet
stepped up his warnings to governments to reduce their borrowing
before they lose the confidence of electorates and financial
markets.
The euro fell to $1.2639, from $1.2692 late Thursday in New
York. The U.S. Dollar Index (DXY) edged up 0.1%. Treasurys slipped,
pushing the yield on the 10-year note above 3%, up to 3.05%. Gold
futures climbed.
Among stocks in focus, Madison Square Garden shares (MSGNV) fell
3.5% after basketball star LeBron James late Thursday confirmed
reports that he will join the Miami Heat, rather than the MSG-owned
New York Knicks.
Best Buy (BBY) declined 1.4% after Jefferies cut its investment
rating on the stock to hold from buy and lowered its earnings
estimates and price target for the consumer-electronics retailer,
citing concerns about "continued softness" in consumer electronic
sales.