Stocks up as tech overshadows credit fears
EmptyNEW YORK -- U.S. stocks eked out a gain Friday on a late-day rally in industrial, technology and energy shares after a strong reading of U.S. employment.
Stocks spent most of the day in the red, threatening to compound the previous day's big sell-off, on mounting fears that the worst of the credit crunch may still lie ahead.
But momentum in big-cap technology stocks like Google and continuing strength in energy stocks such as Schlumberger on a 2% rise in oil prices helped turn the tide in the last hour. Stocks linked closely to the fortunes of the economy, such as Caterpillar and Honeywell, also rose with the help of a surprisingly strong report on the U.S. job market.
Merrill Lynch, which last week shocked investors with $7.9 billion in credit write-downs, fell as much as 12% on reports it could face billions more in losses. The slide was Merrill's biggest single-day drop in 18 years.
"This is a tale of two stock markets," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.
"The reason for the volatility we're seeing is that investors move between focusing on the bad news in housing and finance or on the good news, which is technology.
"Worries are that major financial institutions, Citi, Merrill and others, face very significant write-offs related to their portfolios. The question is: Will that curtail lending, and if so, what does that mean for an economy that runs on money and credit?"
The Dow Jones industrial average was up 27.23 points, or 0.20%, to end at 13,595.10. The Standard & Poor's 500 Index was up 1.21 points, or 0.08%, at 1,509.65. The Nasdaq Composite Index was up 15.55 points, or 0.56%, at 2,810.38.
For the week, the Dow was down 1.53% and the S&P fell 1.67%, while the Nasdaq rose 0.22%.
The Wall Street Journal reported Merrill sought to delay some losses by shifting assets to hedge funds and the U.S. Securities and Exchange Commission is likely to investigate. Deutsche Bank cut its rating on the stock and said additional losses could hit $10 billion.
Merrill's stock ended down 7.9% at $57.28 on the NYSE, after hitting a session low at $54.66.
The entire financials group slid, with the S&P financial index ending down 1.64%, though well off its session low.
But in trading after the bell, Citigroup shares jumped 1% on a report of an emergency board meeting.
In the regular session, Electronic Arts helped the Nasdaq after the video game publisher reported earnings that beat expectations late on Thursday, sending its shares up 2.9% to $60.46. Among large technology companies, Research In Motion rose 4% to $126.95, while Google ended up 1.1% at $711.25. Big-cap technology shares are perceived as being sheltered from problems in the credit market.
Oil prices rose 2.6%, or $2.44, to settle at a record $95.93 a barrel on the New York Mercantile Exchange, buoying shares of energy-related companies. Shares of Schlumberger, the world's largest oil services company by market value, climbed 2.8% to $98.82.
Trading was moderate on the NYSE, with about 1.72 billion shares changing hands, falling short of last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.47 billion shares traded, ahead of last year's daily average of 2.02 billion.
Even as the major indexes eked out gains, declining stocks slightly outnumbered advancers, by a ratio of about 17 to 15 on the NYSE and by about 15 to 14 on Nasdaq.