RTTNews - Stocks finished Friday's session on a mixed note after a shaky start prompted by gross domestic product figures for the second quarter. The major averages closed on opposite sides of the unchanged mark amid another session that was marred by low volume, typical of the summer.
Early trading was swayed by an advance report on second quarter gross domestic product from the Commerce Department. While the report revealed that the U.S. economy continued to shrink by a slower than expected margin, trader concern grew as consumer consumption came in far lower than expected.
According to the data, gross domestic product fell at a pace of 1 percent for the second quarter after economists had expected GDP to fall at a rate of 1.5 percent. Some pessimism was generated by the personal consumption figure in the report, which showed a decrease of 1.2 percent, significantly more than economists had been expecting. This followed a 0.6 percent increase in the first quarter.
Later in the morning, traders largely shrugged off the Institute of Supply Management-Chicago's manufacturing index for July, which came in slightly higher than expected at 43.4. Economists expected the business barometer index to come in at 43 after rising by 5 points to 39.9 in June.
With earnings season drawing to a close, Disney (DIS) and Monster Worldwide (MWW) reported earnings that beat forecasts, while oil giant Chevron (CVX) disappointed. The season's earnings results largely beat expectations, but for the most part due to cost cutting measures rather than revenue growth in a market constricted by the recession.
In other news today, the House of Representatives voted to add another $2 billion to the Cash for Clunkers program to keep it from running out of money months before it was scheduled to be brought to a close.
In an interview with RTT News, Mike Jackson, chairman and CEO of AutoNation, the country's largest dealership chain, discussed the brilliantly designed Cash for Clunkers program. Jackson stated that the program is the best stimulus program yet, adding, You're not going to get a recovery in the U.S. economy without the American automobile industry coming back to life.
After hovering in positive territory throughout much of the trading session, the major averages ended the day on opposite sides of the unchanged line. The tech heavy Nasdaq fell by 5.80 points or 0.3 percent to 1,978.50, while the Dow closed up by 17.15 points or 0.2 percent at 9,171.61 and the S&P 500 rose 0.73 points or 0.1 percent to 987.48.
Despite the mixed performance for the session, the major averages all closed higher for the week due largely to Thursday's rally. The Dow rose 0.9 percent for the week, while the Nasdaq and the S&P 500 posted weekly gains of 0.6 percent and 0.8 percent, respectively.
The resource sector saw notable gains on the day, propelled by strong performances by gold and steel stocks. The upward move came amid a continued rebound in commodity prices, with gold jumping $18.80 to $953.70 an ounce
Trucking stocks also rose by considerable margins, with the Dow Jones Trucking Index posting gain of 1.5 percent on the day. With the climb, the index finished at its best closing level in roughly six weeks.
Banking and housing stocks also advanced, as reflected by the 1.1 percent gain posted by the Kbw Banking Sector Index and the 1 percent gain by the Philadelphia Housing Sector Index. With the jump, the indices closed at their highest levels in well over two months.
While brokerage and defense stocks also rose, considerable losses were visible among electronic storage stocks. The NYSE Arca Disk Drive Index fell by 2.6 percent, pulling back off of its best closing level in nearly ten months.
Health insurance, healthcare provider utility and biotechnology stocks also turned in disappointing performances, although they slid by much more modest margins.
Shares of financial giant Bank of America (BAC) were the leading gainers in the Dow, surging by 5.9 percent. The stock rose for the fifth straight session and closed at a seven-month high.
Alcoa (AA) also saw a strong move to the upside, posting a gain of 2.6 percent on the session. The stock was able to extend its recent gains and closed at its best level in roughly six weeks.
Travelers (TRV), Chevron (CVX), General Electric (GE) and Caterpillar (CAT) also rose by substantial margins, while Disney led the way lower in the blue chip index, posting a loss of 4.2 percent. With the decline, the stock backed further off its highest closing price in nine months set last week.
Disney's steep move to the downside was prompted by the firm's third quarter income report, which revealed that revenues fell well short of Wall Street expectations.
While Johnson and Johnson (JNJ) and Procter & Gamble (PG) also fell, the stocks saw much more moderate losses. Johnson and Johnson closed down by 1.5 percent, retreating from an eight month high, while Procter & Gamble slipped by 1.3 percent.
In overseas trading, stock markets across the Asia-Pacific region finished largely on the upside on Friday, with Hong Kong's Hang Seng Index and Japan's benchmark Nikkei 225 Index posting gains of 1.7 percent and 1.9 percent, respectively.
Meanwhile, the major European markets closed modestly lower, with the U.K.'s FTSE 100 Index and the German DAX Index both finishing down by 0.5 percent, while the French CAC 40 Index dipped by 0.3 percent.
In the bond markets, treasuries saw notable gains following the day's GDP data. Subsequently, the yield on the note, which moves opposite of its price, closed at 3.501 percent, posting a loss of 14.0 basis points on the day.
There are a series of economic reports due to be released next week, culminating in the monthly employment report on Friday.
With jobs seen as the key to consumer spending, and the consumer the main stumbling block to a possible recovery, next week's employment numbers for July will be even more closely watched than normal.
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