Advertisement

Stocks open lower after latest earnings reports

July 18, 2009|Associated Press

NEW YORK — The Dow Jones industrial average rose for a fifth straight day Friday, capping its best weekly gain since March, as investors bet that the stock market had resumed its powerful spring rally.

Boosted by a sharp gain in shares of IBM, the blue chips rose 32.12 points, or 0.4%, to 8,743.94. But the declining stocks slightly outnumbered advancers, and the Standard & Poor's 500 index and the Nasdaq composite ended the day little changed. The Russell 2,000 index of smaller companies dropped 0.5%.

For the week, the three major gauges each gained about 7%, their biggest weekly advances since the first week of the spring surge four months ago. The Russell 2,000 was up 8% for the week.

Unexpectedly strong profit reports triggered this week's ascent. Solid results from Goldman Sachs Group and Intel spurred buying early in the week. But earnings released Friday were mixed, so the market barely budged.

Bank of America and Citigroup on Friday became the latest banks to report big profits, but only because one-time gains offset continuing loan problems. General Electric beat earnings forecasts, but its revenue came up short.

IBM's earnings report, released late Thursday, pushed its shares up 4.3%. Tech stocks in the S&P 500 rose 1% on average.

"The important thing is these earnings results, while not all entirely positive, are beginning to show some signs of stabilization," said Tom Kersting, an analyst at Edward Jones.

The week's upward move halted, at least for the time being, a slide that began in mid-June as investors worried that the 40% jump in stock prices in the early spring had been overdone.

Financial stocks mostly fell Friday, weighing on the broader market.

Shares of Bank of America slid 2.1% after it reported that losses from delinquent loans continued to climb in the second quarter.

Citigroup surprised Wall Street with a $3-billion profit instead of the big loss analysts had expected, but the results were boosted by a gain on the sale of a majority stake in the firm's Smith Barney brokerage.

CIT Group rebounded 29 cents to 70 cents on speculation that the troubled lender might be able to avoid bankruptcy. Its shares tumbled 75% on Thursday after negotiations with federal regulators about a possible rescue fell through.

GE dropped 6% on Friday. The conglomerate's earnings fell 49% on losses in its financial unit and weakness in industrial businesses.

Home builders' shares climbed after an upbeat reading on an unexpected jump in housing starts in June to the highest level in seven months. Hovnanian Enterprises rose 3.3%, while DR Horton gained 2.7%.

Yields on government bonds advanced. The benchmark 10-year Treasury note rose to 3.65% from 3.55% late Thursday.

Oil futures rose $1.54 to settle at $63.56 a barrel. The dollar was mixed, while gold prices rose.

Overseas, key stock indexes climbed 0.6% in Britain and France, 0.4% in Germany and 0.5% in Japan.

Advertisement
Los Angeles Times Articles
|
|
|