MarketsUS stocks staged a late rally to close higher on Friday, capping a rather volatile session where investors closely eyed corporate earnings and attempted to gauge the Federal Reserve's next step. The DJIA closed 67 points higher at 13176.89, the S&P500 added 7.59 points to 1458.74 and the Nasdaq added 18.73 points to close at 2637.24.
Stocks seesawed between positive and negative territory for most of the session as investors sifted through corporate earnings news, hawkish remarks by a Federal Reserve official and nursed ongoing credit market worries. Keeping a lid on gains were comments from Federal Reserve Gov Randall Kroszner, who hinted that the central bank may not continue to lower interest rates, even if the economy worsens.
In corporate news, FedEx cut its earnings outlook, citing higher fuel costs and a strained US freight market. Fed Ex shares finished 4 percent lower on NYSE.
Starbucks reported strong quarterly results, but the company trimmed its fiscal 2008 guidance and reported a decline in traffic at its US stores. Starbucks shares ended nearly 4 percent lower on Nasdaq.
Kohls added to the dismal earnings news, reporting lower profits, while the company also cut its earnings outlook.
The tech sector, however showed some signs of strength as Cisco said it would expand its share buyback program by $10bn. Shares of Hewlett Packard gained nearly 4 percent after a Morgan Stanley analyst upped her rating on the stock, saying she expected the company to show growth through 2009.
Fannie Mae finished over 4 percent as executives of the government sponsored mortgage lender faced scrutiny over their loan loss disclosure practices.
On the economic front, industrial production suffered its biggest decline in nine months during the month of October, the Federal Reserve said. The reading came in worse than expected.
Treasury prices were little changed, leaving the yield on the 10 year note at 4.16 percent.
The US dollar eased versus the euro, but was narrowly higher against the yen.
In commodity trading, oil prices fell Friday as light sweet crude for December lost 25 cents to close at $94.85 on NYMEX.
COMEX gold for December fell 30 cents to close at $787 an ounce.
The Nikkei average reversed earlier gains today and extended its losing streak to the third straight session as the strong yen dampened investor sentiment amid a lack of factors driving up the market. Mizuho Financial Group ended lower after rising as much as 3.4 percent just after the open. The Nikkei closed 112.1 points lower at 15042.6. The dollar dipped against the yen, dented by continuing worries about credit linked losses at financial institutions and talk of dollar selling by Japan institutional investors. The dollar was traded around 110.48 yen, inching back towards an 18 month low of 109.12 hit last week.
Shares in dairy firms Moringa Milk Industry and Meiji Dairies plunged after both companies had their ratings cut by Daiwa Institute of Research due to higher ingredients costs and increased sales expenses.
The FTSE100 closed lower for the second session in a row on Friday as banking stocks tumbled because of persistent worries over the full extent of subprime mortgage losses. The index closed 68.l4 points lower at 6291.2 as gains on Wall Street soon turned negative after a lowered profit outlook by FedEx. US banking and financial stocks fell, as worries about the state of the US economy weighed.
Alliance and Leicester lost 6.3 percent, RBS fell 4.9 percent and Barclays, which unveiled its exposure to credit market problems on Thursday, slipped 4.1 percent. Wells Fargo said Thursday the housing slump was far from over and was the worst since the 1930's Great Depression, sending US and Asian stocks lower. Northern Rock fell 1.6 percent. At least four bidders are set to submit plans for the bank.
With metal prices mixed but concerns about global demand playing on traders minds, mining stocks mostly edged lower. Xstrata fell 1.2 percent, Kazakhmys fell 1.8 percent and Anglo American lost 4.1 percent.
Rio Tinto was 0.7 percent lower and BHP Billiton added 0.3 percent. Rio was reported to be considering a counter bid for BHP as a defence against a multi billion dollar takeover proposal from its bigger mining rival. But analysts said such a move was unlikely. Vedanta Resources bucked the trend to add 3.9 percent and top the FTSE100 leaderboard, after a bullish broker note from Lehman following its first half results on Thursday.
British Land lost 2.5 percent after Lehman Brothers downgraded its rating on the stock to "equal weight" from "overweight" and Goldman Sachs cut its price target.
Kingfisher fell 5.2 percent as traders cited a cautious note on the stock by UBS, which cut its dividend forecasts. Maintaining a "neutral" rating on the stock with a 190 pence price target, UBS analysts say "a weak January and normal weather patterns could get Q1 2008-09 off to a tough start".
British Airways was 3.8 percent lower and fell to its lowest since July 2006 after a rival bid for Iberia media reports of a costly compensation deal for passengers.
Friends Provident slid 4.3 percent after Deutsche Bank cut its price target to 185 pence from 207 pence with a hold rating.
Centrica, Severn Trent and Scottish and Southern Energy all featured on the upside as traders cited defensive switching into the sector.
Economics
US NAHB housing market 18.00 gmt
The NAHB Index of Homebuilder Optimism fell to 18 last month, the record low since the series started in 1985. Even if housing conditions continue to deteriorate, but at a slower rate, this index could improve in the next few months (although staying below the breakeven level of 50).
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