US stocks end week on a mixed note

Earnings dominate the week with topline missing in most cases

US market witnessed mixed end for the week that ended on Friday, 24 April, 2009. It was only tech heavy Nasdaq that managed to eke out gains for the week. The other two major indices – Dow and S&P 500 ended week with modest losses. This came despite stocks at Wall Street registering good gains on the last day of the week, Friday, 24 April, 2009. Earning reports dominated the week and in most cases, the reports checked in much better than feared. There were some merger and acquisition related news also during the week.

The Dow Jones Industrial Average lost 55.04 points (0.7%) for the week to end at 8,076.29. Tech - heavy Nasdaq gained 21.22 (1.3%) to end at 1,694.29. S&P 500 lost 3.37 (0.4%) to end at 866.23. Five of the ten economic sectors registered gains led by materials and technology sectors and five registered losses.

Earning reports dominated the entire week with thirteen Dow components reporting. In most of the cases, the topline failed to meet expectations. Some of the companies that beat or met earnings estimates included IBM, DuPont, Caterpillar, AT&T, McDonald's, Microsoft and American Express. Other technology names included Apple, eBay and Amazon.com. Companies that missed were 3M, Boeing and Merck.

In the financial sectors too, there were a couple of big names reporting earnings. Bank of America reported better-than-expected first quarter earnings, but the company increased its first quarter credit loss provisions to $13.4 billion, up almost $5 billion from the fourth quarter. But, Morgan Stanley reported a larger-than-expected loss and cut its dividend.

In the M&A arena, Sun Microsystems rallied during the week after Oracle announced it will acquire the company for $9.50 per share, which marked a premium of more than 40% above the company's last closing price. The news came after talks with IBM aquiring the company fell apart earlier during the month.

In the US market on Friday, 24 April, 2009, stocks started and ended the day with good gains. After starting the day 52 points higher earlier during the day, The Dow Jones Industrial Average ended higher by 119 points at 8,076. The Nasdaq Composite Index, ended higher by 42 points at 1,694. S&P 500 ended higher by 14 points at 866.

Earning and economic reports dominated the day on Friday. American Express was the primary leader among financial stocks. The company's stock went 20% higher after the company reported better-than-expected earnings.

In the tech sector, Microsoft reported earnings that matched expectations. That, combined with better-than-expected earnings from Amazon.com. In other earnings news, Ford posted a loss that wasn't quite as severe as many had expected.

Among economic reports of the day, new home sales for March came in at a seasonally adjusted annual rate of 356,000, which was better than expected, but down 0.6% from an upwardly revised February reading. In a separate report, March durable goods orders and orders excluding transportation declined 0.8% and 0.6% respectively. Neither was as bad as expected.

Among other economic news for the week at the US market, new unemployment claims for the week ended 18 April matched the consensus estimate of 640,000, representing a 4.4% increase from the 613,000 claims in the prior week. But continuing claims continued to trend in the wrong direction. They jumped 1.5% to another new record level of 6.137 million, implying the difficulty in finding a new job.

In the coming week earnings will remain in focus, as will the FOMC policy statement and economic data with first quarter GDP - both set for release on Wednesday.

For the year 2009, Dow and S&P 500 are down by 8% and 4.1% respectively. Nasdaq is up by 7.4%.