By Jonathan Cheng
U.S. stocks pared their losses in late afternoon trading Friday,
but still looked set to post their second straight week of losses
amid light summer trading volumes.
The Dow Jones Industrial Average (DJI) was down 50 points, or
0.5%, at 10222 with about an hour left to go in trading. The Nasdaq
Composite (RIXF) rose 3 points to 2182 and the Standard &
Poor's 500-share index (SPX)slipped 3 points to 1073, putting all
but the Nasdaq on pace for a second consecutive losing week.
A weakening in the euro on Friday reminded investors of
lingering sovereign-debt concerns and added to the week's
push-and-pull between encouraging corporate news and
weaker-than-expected economic data. A resurgence in deal activity
to the highest levels since late 2009 contrasted with persistent
reminders of the struggling global economic recovery.
"There's been the realization that the economy in the second
half of this year -- and therefore corporate profits -- are going
to be more modest than where a lot of people thought they would be
six months ago," said Adrian Cronje, partner and chief investment
officer at Balentine.
Some investors remained optimistic, arguing that the market had
focused too much on short-term jobs numbers. "We bounced back from
the worst recession we've seen in modern history," said Roy
Williams, chief executive of Prestige Wealth Management. He says he
expects the numbers to show a pickup in jobs and retail spending,
though he allowed that volatility would be a mainstay through the
fall.
Leading the Dow's decline Friday, Hewlett-Packard Co. (HPQ)
shares dropped 2.4%. The technology giant's profit climbed 6.1% on
higher world-wide sales in its fiscal third-quarter, its final
quarter with Mark Hurd at its helm. But investors have been
skittish about H-P since Hurd left the company two weeks ago.
Components with significant overseas exposure weakened after the
euro touched a one-month low following a European Central Bank
official's suggestion that monetary policy should remain loose
until next year. Shares of Caterpillar Inc. (CAT) fell 0.7%,
General Electric Co. (GE) shed 1.4% and manufacturing giant 3M Co.
(MMM) slid 1.3%.
Energy stocks led the S&P 500's declines, as crude-oil
prices fell 1.2% to below $74 a barrel. Sterne Agee & Leach cut
its stock-investment ratings on land drillers to "neutral" from
"buy," citing rising service costs, among other factors. Nabors
Industries Ltd. (NBR) fell 3.8%, while Patterson-UTI Energy Inc.
(PTEN) fell 2.9% and Helmerich & Payne Inc. (HP) slid 2.6%.
In the currency markets, the euro climbed above $1.27, recently
trading at $1.2713, but still down from $1.2819 late Thursday in
New York. The U.S. Dollar Index (DXY), which tracks the currency
against a basket of six others, jumped 0.7%. Demand for safe-haven
Treasurys fell, pushing yield on the 10-year note (UST10Y) down to
2.62%. The two-year note's yield (UST2YR) hit a record low of
0.455% overnight, but edged up in recent trading to 0.495%.
"We're in this mediocre and low-growth path until another year
or so goes by. To me, that's what this week says again," Barbara
Marcin, portfolio manager of the Gabelli Blue Chip Value Fund, said
and noted that industrial production has yet to reclaim its
pre-recessionary level. "We're not back to the levels we were a
couple years ago and therefore people aren't going to hire, and
until we get some employment growth back, we're not going to
restore confidence."
Light trading in August has kept the market bouncing in a narrow
range. With less than an hour left in trading, roughly 2.9 billion
shares had traded hands in New York Stock Exchange Composite
volume, on pace to fall below the daily average of 5.1 billion.
Among stocks in focus, ScanSource (SCSC) rose 5% after its
fiscal fourth-quarter profit rose 12% on strong revenue growth. The
distributor of security devices sold to an increasing number of
customers and saw a resurgence of big deals, which more than offset
falling margins.
The energy sector led U.S. stocks lower Friday, with equities
sliding further into the red in a week punctuated by disappointing
economic data.
The Dow Jones Industrial Average (DJI) fell 105 points. The
measure is now firmly in the red for the week, as disappointing
jobs and manufacturing data on Thursday wiped out gains from
excitement over a resurgence in global merger activity.
Friday's slide in the euro reminded investors of lingering
sovereign debt concerns and added to the week's push and pull
between encouraging corporate news and weaker-than-expected
macroeconomic data. A resurgence in deal activity to the highest
levels since late 2009 contrasted with persistent reminders of the
struggling global economic recovery.
"We're in this mediocre and low-growth path until another year
or so goes by -- to me that's what this week says again," said
Barbara Marcin, portfolio manager of the Gabelli Blue Chip Value
Fund. "We're not back to the levels we were a couple years ago and
therefore people aren't going to hire, and until we get some
employment growth back, we're not going to restore confidence."
The Dow fell 1% to 10,165. Among the measure's worst performers,
Caterpillar (CAT) fell 2.1%, General Electric (GE) shed 2% and
manufacturing giant 3M (MMM) slid 1.8%.
The Nasdaq Composite Index (RIXF) shed 0.7% to 2,165. The
Standard & Poor's 500-share index (SPX) dropped 0.9% to
1,066.
Energy stocks led Friday's decline as crude-oil prices fell more
than 1.4% to below $74 a barrel. Sterne Agee & Leach cut its
stock-investment ratings on land drillers to "neutral" from "buy,"
citing rising service costs, among other factors. Nabors Industries
fell 4.4%, while Patterson-UTI Energy (PTEN) fell 5.3% and
Helmerich & Payne (HP) slid 4.3%.
Multinational companies with overseas operations also slid as
the euro weakened. The common currency touched a one-month low
after a European Central Bank official suggested monetary policy
should remain loose until next year.
The euro was recently trading at $1.2692, down from $1.2819 late
Thursday in New York. The U.S. dollar index (DXY), which tracks the
currency against a basket of six others, jumped 0.8%.
Demand for safe-haven Treasurys rose, pushing the yield on the
10-year note (UST10Y) down to 2.57%. The two-year note's (UST2YR)
yield hit a record low of 0.455% overnight, but edged up slightly
in recent trading to 0.48%.
Light trading in August has kept the market bouncing in a narrow
range. After three hours of trading, less than 2 billion shares had
traded hands in New York Stock Exchange Composite volume, on pace
to fall below the daily average of 5.1 billion.
"The market, being range-bound, is at the mercy of whoever last
spoke and the most recent number. It is very frenetic in its
reaction to news," said Liz Ann Sonders, chief investment
strategist at Charles Schwab.
Among stocks in focus, Hewlett-Packard (HPQ) dropped 2.8%, even
as its profit climbed 6.1% on higher worldwide sales in its fiscal
third-quarter, the technology giant's final quarter with Mark Hurd
at its helm. But investors have been skittish about H-P since Hurd
left the company two weeks ago, during which the stock has lost
about 12% of its value.