With traders digesting the latest batch of earnings news, stocks ended Friday's trading modestly higher after a relatively lackluster session. The major averages ended the day just above the unchanged line but still managed close higher for the sixth consecutive week.
Earlier in the day, General Electric (GE) released its first quarter financial results, reporting earnings from continuing operations of $0.26 per share, down from $0.43 per share in the previous year. On average, analysts expected the company to report earnings of $0.21 per share.
Citigroup (C) also released its first quarter results, reporting a loss available to common shareholders that shrank significantly to $0.18 per share from $1.03 per share in the year ago quarter. Analysts expected the company to report a loss of $0.34 per share.
In other corporate news, General Motors (GM) CEO Fritz Henderson said it was more probable that the auto giant would need to seek bankruptcy protection in order to complete its restructuring process, although he noted that isn't the company's preferred option.
Meanwhile, on the economic front, the Reuters/University of Michigan's consumer sentiment index for April rose to 61.9, a substantial increase from the previous reading. Analysts had expected the index to rise to 58.5 from 57.3 in March.
Robert Pavlik, chief market strategist at Banyan Partners, discussed the market's sluggish trading in an interview with RTT News, suggesting that the markets are in a consolidation phase, although he said he is quite positive moving forward.
Pavlik said, We're encouraged and we're optimistic and we think this market has more room to run.
In other news, Federal Reserve Chairman Ben Bernanke delivered a speech earlier in the day in which he offered his support to financial innovation, despite the fact that some of these new products have contributed to the current economic crisis.
Bernanke argued that increased regulation would be a better response than eliminating innovation. The Fed chief noted that while financial innovation can misfire, more often the benefits outweigh the downside.
Financial innovation has improved access to credit, reduced costs, and increased choice, he said. We should not attempt to impose restrictions on credit providers so onerous that they prevent the development of new products and services in the future.
The major averages moved to the downside going into the close, ending the day modestly higher. The Dow closed up 5.90 points or 0.1 percent at 8,131.33, the Nasdaq closed up 2.63 points or 0.2 percent at 1,673.07 and the S&P 500 closed up 4.30 points or 0.5 percent at 869.60.
As mentioned above, Friday's modest gains helped the major averages to post their sixth straight week of gains. While the Dow rose 0.6 percent for the week, the Nasdaq and the S&P 500 posted weekly gains of 1.2 percent and 1.5 percent, respectively.
Despite the late-day pullback by the major averages, banking stocks continued to turn in some of the market's best performances. After seeing early weakness, the Kbw Bank Index closed up 3.4 percent, ending the session at a three-month closing high.
Synovus Financial (SNV) and Huntington Bancshares (HBAN) turned in two of the banking sector's best performances, closing up 18.6 percent and 17.5 percent, respectively.
Housing stocks also moved sharply higher over the course of the trading day, resulting in a 3.8 percent gain by the Philadelphia Housing Index. With the gain, the housing index also finished the day at its best closing level in three months.
Significant strength was also visible in the healthcare provider, brokerage, natural gas, and oil service sectors. The gains by oil service stocks came amid a modest increase by the price of oil, with crude for May delivery closing up $0.35 at $50.33 a barrel.
At the other end of the spectrum, a continued decrease by the price of gold contributed to notable weakness among related stocks. With gold for June delivery closing down $11.90 at $867.90 an ounce, the Amex Gold Bugs Index closed down 4 percent.
While most of the Dow components moved off their highs going into the close, a notable advance by American Express (AXP) helped the blue chip index to close higher. Shares of AmEx closed up 5.4 percent, at a more than four-month closing high.
Consumer products giant Procter & Gamble (PG) also posting a notable gain, ending the session up 2.4 percent. With the gain, P&G reached its best closing level in over two months.
Strong gains by Bank of America (BAC) and McDonald's (MCD) also contributed to the modest gain by the Dow, with both stocks closing up 2.5 percent.
On the other hand, a steep loss by Citigroup helped to limit the upside for the Dow, with the financial services giant closing down 9 percent. General Motors also showed a notable decline, closing down 4.1 percent following the comments from its CEO.
Tech giants Microsoft (MSFT) and Intel (INTC) were among the other Dow components that posted notable losses, closing down 2.8 percent and 1.8 percent, respectively.
In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Friday, benefiting from the strength seen on Wall Street overnight. Nonetheless, some late-day profit taking limited the upside for the markets.
The major European markets also closed higher, although off their best levels of the day. The U.K.'s FTSE 100 Index finished the session up 1 percent, while the French CAC 40 Index and the German DAX Index posted gains of 1.8 percent and 1.5 percent, respectively.
In the bond market, treasuries closed just off their lows of the day, suffering considerable weakness. Subsequently, the yield on the benchmark 10-year note closed substantially higher, up 10 basis points at 2.93 percent.
Earnings season will continue in full force next week, with Bank of America among the big name companies due to release their quarterly results on Monday. Eli Lilly (LLY) and Hasbro (HAS) are also due to report their results.
While Monday is relatively light on the economic front, the Conference Board's leading indicators index will be released at 10 a.m. ET.
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