Wall St. Ends Week Reflecting Mixed Results

Techs up, but recession still has many worried

Friday, Jan 23, 2009  |  Updated 4:02 PM CDT
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Wall St. Ends Week Reflecting Mixed Results

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Markets muddle through the end of the week on good and bad news.

Investors' ambivalence about earnings reports left Wall Street with a mixed performance Friday.

Traders pounced on companies showing signs of life and dumped companies whose quarterly results fell short of expectations. Better-than-expected 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.

According to preliminary calculations, 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.

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.

Jim Herrell, chief investment office at Partnervest Financial Group, said the market also drew some support from Aflac Inc.'s affirmation of its financial health.

Technology stocks got a boost from Google's surpassing analysts' estimates. Excluding one-time charges, Google said after the end of trading Thursday that it earned about $5.10 per share, compared with analysts' expectations for profit of $4.95 per share, according to Thomson Reuters. Google stock rose $18.64, or 6.1 percent, to $325.14.

The battered financial industry was rallying on the strength of the insurance industry, particularly Aflac. After its shares tumbled 37 percent Thursday on reports it did not have enough capital to cover risky investments, shares of Aflac are up sharply Friday. The company issued a statement and an analyst released a research note backing the company's financial position. Aflac shares rose $3.11, or 13.6 percent, to $26.01.

Herrell said General Electric Co.'s fourth-quarter results were worrying investors and keeping the Dow from enjoying a bigger rally. GE is a component of the Dow.

While the 46 percent drop in earnings met Wall Street's lowered expectations, investors are worried 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 $1.43, or 10.7 percent, to $12.05.

Corporate results are pushing and pulling the market as investors try to determine where the economy is headed.

Markets fell sharply Friday morning, weighed down by worse-than-expected results at a wide range of companies that had investors worrying that the economy is in for an even longer recession than expected. But markets pared losses Friday, similar to Thursday's move when markets fell but improved off intraday lows.

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: Copier and printer maker Xerox Corp. fell 8 percent after its results fell short of expectations. 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 6 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 $4.94, or 12.7 percent, to $43.77, while Pfizer fell 2 cents to $17.19.

Meanwhile, bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.61 percent from 2.60 percent late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.10 percent from 0.09 percent late Thursday.

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

Oil prices rose $2.04 to $45.71 a barrel on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average fell 3.8 percent. 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.

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