By Donna Kardos Yesalavich
NEW YORK (MarketWatch) -- U.S. blue chip stocks edged up Friday
while the Standard & Poor's 500 index fell slightly in a quiet
end to a strong October as investors bided their time before next
week's Federal Reserve meeting and midterm elections.
The Dow Jones Industrial Average(DJI) closed up 4.54 points, or
0.04%, to 11118.49.
Microsoft (MSFT) was among the Dow's best performers with a 1.5%
rise. The software giant's fiscal first-quarter profit climbed 51%,
benefiting from a continued strong response to the Windows 7
operating system and Office 2010. Microsoft is also the Dow's best
performer this month, up 9.1% over the period.Read about
Microsoft's results.
Chevron and Merck helped limit the Dow's gain. Chevron (CVX)
fell 2.2% after the oil major's third-quarter earnings and revenue
missed analysts' expectations. Merck (MRK) dropped 1.7% as the
company's earnings excluding items topped Wall Street estimates,
but revenue fell short of forecasts.
The technology-heavy Nasdaq Composite (RIXF) rose 0.04% to
2507.41. The Standard & Poor's 500-stock index (SPX) was nearly
unchanged at 1,183.26. The health-care sector slumped as Merck
weighed.
Monthly returns
Friday, which marks the 81st anniversary of the Crash of 1929
known as "Black Tuesday," was the final trading day of what has
been a strong October for stocks. The Dow climbed 3.06% during the
month and the S&P 500 rose 3.69% for October, the Dow's best
October since 2006 and the S&P 500's best October since
2003.
This month's climb has come on growing expectations that next
week the Federal Reserve will announce more stimulus and midterm
elections will lead to a Republican takeover of the House.
"We've got a huge week next week," said Jim Paulsen, chief
investment strategist at Wells Capital Management. "Today's market
may just be the perfect reflection of that quandary -- how big a
position do you want to take leading into that?"
Data released Friday showed the economy expanded in the third
quarter at a slightly faster pace compared to the previous quarter,
but growth remains too weak to cut unemployment any time soon.
Gross domestic product, the value of all goods and services
produced, rose at an annual rate of 2.0% after climbing 1.7% in the
second quarter. Economists had expected 2.1% growth.
The data showed inflation remains very soft. The Fed's preferred
gauge, the price index for personal consumption expenditures
excluding volatile food and energy items, rose an annualized 0.8%
in the third quarter, below the second quarter's 1% increase.
The GDP report "means we're not growing fast enough to make a
dent in the unemployment rate," said Jeff Applegate, chief
investment officer at Morgan Stanley Smith Barney. He said that
only adds to the case for the Fed to unveil a quantitative easing
program next week.
Other economic figures released Friday were mixed.
Consumer-sentiment data from Reuters/University of Michigan showed
the consumer mood darkened at the end of October, while the Chicago
Business Barometer, formerly known as Chicago PMI, edged up from
September and topped expectations.
The dollar weakened slightly, with the U.S. Dollar Index (DXY) ,
which tracks the U.S. currency against a basket of six others, off
0.2%. Meanwhile, Treasurys edged higher, pushing the yield on the
10-year note (UST10Y) down to 2.62%. Crude-oil futures fell while
gold futures were flat.
Among stocks in focus, Genworth Financial (GNW) tumbled 9.9%.
The life insurer's operating earnings unexpectedly dropped as
stronger international operations couldn't offset weakness in life
and mortgage insurance. S&P Equity Research cut its target
price on Genworth's shares following the report.
Adding to the downward pressure on the insurer's shares,
hedge-fund manager Steve Eisman said on Genworth's third-quarter
conference call that the company isn't meeting its cost of capital
in any of its businesses. He suggested Genworth consider shutting
down some businesses and use the money saved to buy back
shares.
Monster Worldwide (MWW) shares soared 26%. The employment
website operator struck an optimistic tone as it reported
stronger-than-forecast bookings in its third quarter, leading the
company to narrow its loss projection for the year. The third
quarter was the first since early 2008 that Monster has seen
revenue, bookings and deferred revenue all grow year-over-year.