A strong consumer spending and earnings report wasn’t enough to fend off the pre-holiday doldrums on Wall Street Friday, as stocks finished an uninspired session mixed. However, Wall Street's main stock indices managed to close a week with solid gains for the first time in over a month.
Profit-taking following the previous session’s rally kept prices lower as investors took a rare chance to lock in gains. Volume was low in advance of the Memorial Day holiday as well. In addition, some investors were looking forward to next Friday’s key employment figures to further bolster their bullishness.
“We’ve made some good progress in the past few days, but the market is tired,” said Russ Koesterich, U.S. equity strategist at State Street Corp. in Boston. “The market was oversold coming into mid-May. Investors have been nibbling, but we haven’t seen the kind of volume that would suggest that the institutions are really coming in.”
The Dow Jones industrial average fell 16.75 points, or 0.2 percent, to 10,188.45. The index had posted a gain of 95.31 points on Thursday.
Broader stock indices were mixed. The Standard & Poor’s 500-stock index slipped 0.60 point, or 0.1 percent, to 1,120.68, and the Nasdaq composite index was up 2.24 points, or 0.1 percent, at 1,986.74.
For the week, the Dow gained 221.71 points, or 2.2 percent, the S&P 500 index rose 27.08 points, or 2.5 percent, and the Nasdaq was up 74.65 points, or 3.9 percent. It was the first positive week for the Dow and S&P after four straight weeks of losses, while the Nasdaq posted its second straight week of gains.
The past week also helped the markets turn finish the month on a positive note, leading some analysts to believe that the markets have finally reached their short-term lows and will move higher in June. For the month, the S&P rose 1.2 percent and the Nasdaq was up 3.5 percent, while the Dow was down just 0.4 percent.
For the year so far, the S&P was 0.8 percent higher, while the Dow was down 2.5 percent and the Nasdaq was off 0.8 percent.
Earlier, the Commerce Department reported that consumer spending rose 0.3 percent in April, another solid gain after a 0.5 percent hike in March.
Even more encouraging: personal income rose 0.6 percent in April, following a 0.4 percent increase in March — a sign that consumers will have more to spend in the future and can absorb some of the inflationary effects in the market, such as high oil prices.
Separately, reports said a key reading on U.S. consumer sentiment slipped in May. The University of Michigan's final survey of consumer confidence fell to a reading of 90.2 from April's final reading of 94.2.
Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., attributed the sluggish performance to investors unwilling to make major new commitments ahead of the three-day weekend and with a threat of a terrorist attack looming.
“The best you can say is the market has held the gains of the week,” Battipaglia said. “One has to come back to the notion that a very strong quarter profit-wise and very decent economic news suggests that there’s an underpinning in the market to hold at these levels.”
Shares of semiconductor makers rose across the board after Novellus Systems Inc., a maker of chip manufacturing equipment raised its earnings and revenue targets for the second quarter.
In a mid-quarter conference call, executives were bullish about their business prospects and said conditions were improving steadily. Novellus was up $1.91 at $33.29, Intel Corp. rose 10 cents to $28.55, and National Semiconductor Corp. gained 71 cents to $21.67.
Frontier Airlines Inc., reporting quarterly earnings before the session, had a harder time absorbing fuel costs. The airline posted a wider-than-expected loss due to rising fuel prices and intense competition among low-fare carriers. Frontier fell 6 cents to $9.30.
Coeur d’Alene Mines was down 37 cents at $4.69 after announcing an effort to buy Wheaton River Minerals Ltd. in a $1.8 billion cash-and-stock deal. Wheaton River lost a penny to $2.91.
Riggs National Corp. jumped $3.10 to $21.84 after The Washington Post reported that the commercial banking company had hired an investment bank to seek out potential buyers.
El Paso Corp. fell 52 cents to $7.21 after the Houston-based energy company said its financial reports for the fourth quarter 2004 and first quarter have not yet been audited. The company announced that it would revise the results earlier this month after it overstated oil and gas production levels.
Advancing issues outnumbered declining ones by about 3 to 2 on the New York Stock Exchange, where volume came to 1.17 billion shares, well below Thursday’s 1.44 billion. The Russell 2000 index of smaller companies finished the day down 0.25 point, or 0.04 percent, at 568.31.
Overseas, Japan’s Nikkei average rose 1.3 percent. In Europe, Britain’s FTSE 100 slipped 0.5 percent, Germany’s DAX index was down 0.3 percent and France’s CAC-40 gave up 0.7 percent.