Stellar earnings results provided sufficient impetus to markets as they edged modestly higher on Friday, amidst lingering concerns about debt-ceiling negotiations. The week also closed with gains as earnings provided enough cushion for the benchmarks to settle in the green.
The Dow Jones Industrial Average (DJIA) was the only benchmark to end in the red as it dropped 0.3% to finish the day at 12,681.16. The Standard & Poor 500 (S&P 500) gained 1.2% to end the day at 1,345.02. The tech-laden Nasdaq Composite Index closed at 2,858.83, after gaining 0.9%. On the New York Stock Exchange (NYSE), consolidated volumes remained low at 3.3 billion shares. The markets’ breadth or the advance decline ratio was roughly even.
With the likes of Apple Inc. (NASDAQ:AAPL), International Business Machines Corp. (NYSE:IBM) and The Coca-Cola Company (NYSE:KO) posting strong earnings results throughout the week, the markets happily settled in positive territory. Despite the fall in the Dow on the closing day of the week, the blue-chip index was up 1.6% for the week. The S&P 500 and the Nasdaq gained 2.2% and 2.5% respectively for the week.
On Friday, no significant economic reports were scheduled which could provide the market with direction, and it was left to corporate results to guide the benchmarks. However, the blue-chip index finished lower amidst encouraging results after a significant component, namely Caterpillar Inc. (NYSE:CAT) plunged 5.8% after its results fell shy of estimates. Caterpillar’s results are of special significance as its business of selling construction and mining machinery spans the entire globe.
Corporate results did much to lift investor sentiment on Friday. Boosted by robust results from tech-heavyweights Advanced Micro Devices, Inc. (NYSE:AMD) and Microsoft Corporation (NASDAQ:MSFT) the broader markets enjoyed a rally negating disappointing results from Caterpillar. The two tech stocks were up 19.2% and 1.6%, respectively.
Earnings results were also strong enough to help the S&P 500 surge ahead despite only three of its 10 industry groups managing a finish in the green. The technology, energy and the consumer discretionary sectors were the only sectors which ended higher. The technology sector gained momentum from the tech bellwethers’ strong results. Strong results from McDonald’s Corp.’s (NYSE:MCD) provided significant momentum to consumer discretionary sector as the stock surged 2.3%.
Coming to the energy sector, crude oil futures were up 0.8% and settled at $99.87 per barrel on the New York Mercantile Exchange. As for the stocks in this sector, Exxon Mobil Corporation (NYSE:XOM), BP plc (NYSE:BP) and Total SA (NYSE:TOT) closed after gaining 0.2%, 0.4% and 1.3%, respectively. Meanwhile, Schlumberger Limited (NYSE:SLB) reported favorable results and ended with gains of 3.1%.
The deadlock over the debt-ceiling continued to keep gains in check as investors remained wary of the final outcome. The air was thick with ambiguity as investors kept praying for a quick and favorable solution. According to The Wall Street Journal, President Barack Obama and House Speaker John Boehner are said to be close to an agreement which will cut spending by roughly $3 trillion and modify the tax code. However, both of them denied a reports in The New York Times that an agreement was in the offing soon.
While political bickering over lifting the debt ceiling continues to drag on in the domestic arena, on the other side of the Atlantic, European leaders settled for a $157 billion rescue plan for Greece on Thursday.
