By Donna Kardos Yesalavich
U.S. stocks climbed Friday, putting the market on pace for its
best week in nearly a year thanks to improving expectations for the
second-quarter reporting season beginning Monday.
The Dow Jones Industrial Average (DJI) has climbed some 5% this
week, marking its best week since the week ended July 17, 2009. The
rally comes as investors have grown hopeful that the market's
recent drop to 2010 lows may have exaggerated expected effects on
corporate earnings from the slumping euro and slower global
growth.
"The earnings are expected to again beat expectations as they
have the past couple quarters, but what they're looking for is the
guidance," said Roy Williams, chief executive of Prestige Wealth
Management. "That will be the big indicator."
Williams expects the earnings season to be positive for the
stock market if it can return investors' focus to U.S. corporate
fundamentals from the global concerns, especially regarding the
euro zone, that have hurt the market in recent months.
"My hope is the earnings will improve the psyche of the
individual investor," he added. "We do face challenges, and we're
going to have a lot of volatility, but ... the economy is
continuing to grow."
The Dow was up 47 points, or 0.5%, to 10,186, in recent trading.
Alcoa (AA) rose 2.1% ahead of its second-quarter report due Monday.
Caterpillar (CAT) was also strong, up 2.4%, and Chevron (CVX)
climbed 2.2% as crude-oil futures climbed above $76 a barrel.
The Nasdaq Composite (RIXF) rose 0.8% to 2,192, bolstered by a
2.4% 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 Standard & Poor's 500-stock index (SPX) added 0.6% to
1,077. The materials sector led the measure's gains, while
financial and consumer-discretionary stocks were also strong.
Consumer staples were the only category in the red.
Trading volume was weak. Less than 3 billion shares had changed
hands in NYSE Composite volume with less than an hour left to the
trading session. The recent daily average has been over 5
billion.
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 with 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 fell to $1.2646, from $1.2692 late Thursday in New
York. The U.S. Dollar Index edged up 0.1%. Treasurys slipped,
pushing the yield on the 10-year note (UST10Y) above 3%, up to
3.05%. Gold futures also climbed.
Among stocks in focus, Madison Square Garden (MSGNV) fell 4%
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 2.5%. The business-software
maker's fiscal fourth-quarter earnings fell 30% and the company
projected first-quarter earnings and revenue below analysts'
estimates.