New York – U.S. stocks closed higher on the day and mixed on the week Friday, after upbeat news on wholesale inflation and weak retail sales lifted hopes that the Federal Reserve will eventually cut interest rates to boost a slowing economy.
A government report showing weak April retail sales was expected by the market, after shares fell sharply Thursday when individual retailers posted bleak monthly sales.
“It seems as though investors are still looking for any reasons to enter this market, and certainly, (the Dow’s) triple-digit losses is a pretty good reason,” said Paul Nolte, director of investments at Hinsdale Associates.
Georges Yared of Yared Research said that although markets took “a healthy dip” Thursday, on Friday “it was back to the races.”
The Dow Jones Industrial Average closed up 111 points at 13,326. For the week, the Dow posted a 0.5 percent gain.
On Friday, strong gains were seen in Alcoa, Caterpillar, 3M, Honeywell International and Merck.
Also among blue chips, AIG rose 0.7 percent after posting a 29 percent profit rise, as its property and casualty insurance business avoided big losses as it maintained premium growth.
“As long as the economic data is not too bad, then investors will remain committed to putting money in the market,” said Hinsdale’s Nolte. “Money is especially going to (large-capitalization) stocks, where one finds global companies that should benefit from global growth and a weak dollar.”
The S&P 500 gained 14.38 points to 1,505.85, while the Nasdaq advanced 28.17 points to 2,561.91. The S&P 500 was unchanged on the week, and the Nasdaq dropped 0.4 percent.
Technology shares found support from an upgrade of chip equipment maker Applied Materials. Its stock rose 3.1 percent after UBS upgraded the stock to buy from neutral, citing the firm’s increased capital spending.
But weighing on the Nasdaq, Amgen dropped 2.2 percent after being downgraded by four brokers on the back of a decision from the U.S. Food and Drug Administration. An FDA unit has recommended label changes for erythropoiesis stimulating agents, which could have a material impact on the Amgen drug Aranesp in chemotherapy-induced anemia. According to Citigroup, the decision puts roughly 22 percent of Amgen revenue at risk.
After being set aside during earnings season, economic data are once again in investors’ focus.
Though the Federal Reserve left interest rates unchanged Wednesday, it did note slowing economic conditions while maintaining that inflation remained its top concern.
Meanwhile, U.S. retail sales fell a worse- than-expected 0.2 percent in April, the worst showing in seven months, according to the Commerce Department. The weakness in sales spilled beyond home products to include clothing, sporting goods and restaurants.
