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Wall Street ends mixed as tech, financials rally

Saturday, January 24, 2009 , Posted by Linda at 10:59 AM

NEW YORK – Investors' ambivalence about earnings reports gave Wall Street a mixed performance Friday.

Traders work on the floor of the New York Stock Exchange Friday, Jan. 23, Traders work on the floor of the New York Stock Exchange Friday, Jan. 23, 2009

Traders pounced on companies showing signs of life and dumped companies whose quarterly results fell short of expectations. Better-than-forecast results from Google Inc. helped technology shares while lackluster numbers from General Electric Co. reinforced investors' concerns about the depths of the recession.

Insurer Aflac Inc. helped ease some of Wall Street's concerns about the financial industry after reassuring investors it had more than enough cash to maintain its credit ratings. The company's stock tumbled 37 percent Thursday on reports it did not have adequate capital to cover risky investments. The company issued a statement and an analyst released a research note backing the company's financial position. Aflac rose 6.9 percent.

The results from GE weighed on industrial names and held the Dow Jones industrial average to a loss as broader indexes climbed. The company's results met Wall Street's lowered expectations but investors grew worried that GE will reduce its dividend. They are also nervous the company could lose its coveted "AAA" credit rating because of the recession that has crimped lending at GE Capital and hurt its industrial and entertainment businesses. GE fell 11 percent.

Stocks ended a volatile session well off their lows. A sizable comeback Friday was the latest back-and-forth seen throughout a turbulent week; the Dow tumbled 4 percent Tuesday, jumped 3 percent Wednesday and fell again Thursday.

Volatility has been more the rule than the exception in recent trading as investors sort through a plethora of wide-ranging earnings reports; the market is looking to companies results and their outlooks to give them some indication of when the recession might lift.

Although earnings and company outlooks ultimately dictated the direction of stocks, this was also the first week of the Obama administration. While the new president pushed Congress to approve an economic stimulus plan, investors still struggled with fears that the now 14-month-old recession will be protracted in spite of the government's efforts.

"I think we had a lot of bad news to absorb and stocks did OK," said Thomas J. Lee, equities analyst at JPMorgan, referring to the week's performance.

On Friday, the Dow industrials fell 45.24, or 0.56 percent, to 8,077.56. The Dow had been down more than 200 points early in the day and briefly moved into positive territory.

Broader stock indicators rose. The Standard & Poor's 500 index rose 4.45, or 0.54 percent, to 831.95, while the Nasdaq composite index rose 11.80, or 0.81 percent, to 1,477.29.

The Russell 2000 index of smaller companies rose 1.51, or 0.34 percent, to 444.36.

Advancing issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange, where consolidated volume came to 5.72 billion shares compared with 5.75 billion shares traded Thursday.

For the week, the Dow is down 2.5 percent, the S&P 500 is down 2.1 percent and the Nasdaq is ending off 3.4 percent.

"We had bad earnings. It's all coming in below reduced expectations," Lee said.

The results, particularly from the banks, weighed on stocks. Fears arose that banks' were so troubled the government would have to step in and essentially take over some financial companies. Such a move would most likely wipe out shareholders and revive fears that the economy is even worse off than investors had assumed.

Even beyond banks, reports from a range of industries gave fresh evidence of the toll the weak economy is taking and sent markets sputtering out of the gates Friday: Copier and printer maker Xerox Corp. slid 7.4 percent after its results fell short of projections. Capital One Financial Corp., which focuses on credit card lending, reported a loss rather than the profit Wall Street expected after it set aside money to cover bad debt. The stock lost 12 percent.

And Harley-Davidson Inc. said it will cut jobs and reduce shipments because of falling demand. The company's earnings for the final quarter of 2008 fell nearly 60 percent, sending the stock down 7.3 percent.

In other corporate news, The Wall Street Journal is reporting drug maker Pfizer Inc. is in talks to acquire rival Wyeth in a deal valued at more than $60 billion. Citing unidentified sources, the Journal said the discussions have been going on for months, but a deal is not imminent. Wyeth jumped $4.91, or 13 percent, to $43.74, while Pfizer rose 24 cents to $17.45.

Meanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.62 percent from 2.60 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, was flat at 0.09 percent from late Thursday.

The dollar was mostly higher against other major currencies, and gold prices rose.

Light, sweet crude jumped $2.80 to settle at $46.47 a barrel on the New York Mercantile Exchange.

Overseas, Britain's FTSE 100 rose 0.01 percent, Germany's DAX index fell 0.96 percent, and France's CAC-40 lost 0.71 percent. Japan's Nikkei stock average fell 3.81 percent.

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