Wall Street tussled again with interest rate concerns Friday, closing mixed as a solid earnings report from Microsoft Corp. lifted tech stocks but failed to spark broad-based buying in other sectors.
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The major stock indicators managed gains for the day and a modest advance for the week. But declining issues had a 2-to-1 lead over advancers on the New York Stock Exchange Friday, reflecting Wall Street’s general uneasiness about rising rates. The market’s nervousness was exacerbated by news of a surge in durable goods orders.
In addition to Microsoft, Corning Inc. posted a strong first quarter as did International Paper Co. and Weyerhaeuser Co., both bellwethers for the forestry products sector.
The Dow Jones industrial average edged up 11.64 points, or 0.1 percent, to close at 10,472.84 after rallying nearly 144 points on Thursday as investors had a one-session reprieve from rate concerns.
The tech-dominated Nasdaq composite index rose 16.86 points, or 0.8 percent, to 2,049.77, following its 1.9 percent surge Thursday, and the Standard & Poor’s 500-stock index inched up 0.67 points, or 0.1 percent, to 1,140.60.
The Nasdaq outperformed the other indexes for the week, rising 2.7 percent, while the Dow rose 0.2 percent and the S&P 500 picked up 0.5 percent.
Blue-chip stocks were lower for much of the day Friday as a report of strong durable goods orders in March fanned fears that the economy may be bouncing back fast enough for the Federal Reserve to begin raising rates from 45-year lows.
The Commerce Department said orders for manufactured goods rose by a robust 3.4 percent last month. The increase followed an even better 3.8 percent rise in February and surpassed the 0.7 percent rise expected by economists.
“We’re in a transition phase with this market,” said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. “For the first year of recovery, good news has been nothing but good news because investors weren’t worried about the Fed raising rates. But when we get news like today ... it causes worry about when the Fed will come in to raise rates and by how much.”
Investors have been skittish about higher rates for the past two weeks, particularly after Federal Reserve Chairman Alan Greenspan gave two days of testimony in Congress this week that markets took to be a signal that interest rates could rise.
Other signs of economic strength such as jobs growth and higher consumer prices reinforced the concerns about higher rates, which could hurt stocks as well as bonds.
“I think the market’s adjusting to the fact that the economy is gathering so much momentum. The question now is, will there by a shortage of labor?” said Kevin Gaughan, portfolio manager and equity strategist at Strong Financial Corp. in Milwaukee. “That’s a sea change. Being an anticipatory creature, the market is looking ahead to the next issue.”
The market had appeared to move past those concerns on Thursday, when several strong earnings reports led investors to plow money back into the stock market.
Tech stocks advanced Friday after Microsoft reported a big gain in revenues after the market close on Thursday.
Microsoft jumped $1.59 to $27.54 after the software giant posted a massive 17 percent gain in revenues last quarter and beat analysts’ expectations for earnings growth.
However, Amazon.com fell $2.57 to $46.29 despite posting a 41 percent increase in revenues and beating profit expectations in its latest quarter as investors worried whether the Internet retailer was discounting its products too much.
Shares in Corning Inc. jumped $1.88 to $12.13 after the materials company, which specializes in fiber-optic and glass products, reported profits that handily beat forecasts, driven by a nearly twofold surge in sales of glass used in flat-screen computer monitors and televisions.
WellChoice rose $1.88 to $39.90 after the company abandoned talks with Oxford Health Plans about taking over the rival health insurance company.
The Russell 2000 index fell 2.53 points, or 0.4 percent, to close at 590.71. Trading volume on the Big Board was moderate.
Overseas, Japan’s Nikkei stock average rose 1.2 percent. Britain’s FTSE 100 was down 0.04 percent, Germany’s DAX index was up 1.1 percent, and France’s CAC-40 was up 0.7 percent.