Stocks stabilize, but end down for the week


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Posted Online: July 11, 2014, 11:22 pm
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NEW YORK (AP) U.S. stocks stabilized and ended with a small gain Friday, but it wasn't enough to prevent the market's biggest weekly drop since April.

Investors became more cautious this week as corporate earnings for the April-June period began trickling in. Worrisome news about a Portuguese bank also revived fears about the European debt crisis. That weighed on stocks, which had closed out the previous week at record highs.

Investors are now mulling whether the stock's market valuations are justified by the outlook for company earnings, or whether they have risen too far, too fast.

As investors try to make sense of the market, 'we could be in a holding pattern,' said Kristina Hooper, US Investment Strategist at Allianz Global Investors.

The Standard & Poor's 500 index rose 2.89 points, or 0.2 percent, to 1,967.57 on Friday. Its weekly decline of 0.9 percent was the biggest since April 11.

The Dow Jones industrial average climbed 28.74 points, or 0.2 percent, to 16,943.81. The Nasdaq composite rose 19.29 points, or 0.4 percent, to 4,415.49.

On Friday, investors absorbed corporate news and earnings.

Lorillard, whose cigarette brands include Newport, Old Gold and Kent, rose $2.92, or 4.6 percent, to $66.01. Lorillard and rival Reynolds American confirmed they are in talks to combine a deal that would create a formidable rival to Altria Group Inc., owner of Philip Morris USA.

Investors also pored over company earnings.

Fastenal, a maker of industrial fasteners, fell the most in the S&P 500. Its stock dropped $2.01, or 4.2 percent, to $46.15 after reporting sales that missed analysts' expectations.

As U.S. companies start to report second-quarter results, investors expect more growth in profits. Earnings for S&P 500 companies are forecast to climb by 6.4 percent. That rise would be bigger than the 3.4 percent increase in the first quarter and the 4.9 percent in the same period a year earlier, according to data from S&P Capital IQ.

While earnings are rising, stock valuations have also climbed.

The price-earnings ratio for S&P 500 companies, which measures a company's stock price compared to next year's forecast earnings, has edged higher to 15.7 from 15.1 at the start of this year and 12.6 at the start of 2013.

'With valuations where they are ... we are pleasantly surprised at the resilience of the market,' said Colleen Supran, a principal at Bingham, Osborn & Scarborough, an investment management company. 'Investors still seem to be able to find reasons not to panic.'

That was evident Friday, and even Thursday, when the U.S. stock market opened with a plunge as investors worried about the financial health of a holding company linked to Portugal's biggest bank.

The market regained much of its early loss Thursday afternoon. On Friday, it held steady.

In government bond trading Friday, prices rose. The yield on the 10-year Treasury note, which moves in the opposite direction to its price, dropped to 2.52 percent from 2.54 percent.

Oil had its biggest one-day drop since April, as Libyan oil appears poised to return to the market while global demand looks to be muted. Oil fell $2.23, or 2.2 percent, to $100.70.














 



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  Today is Thursday, July 31, the 212th day of 2014. There are 153 days left in the year.

1864 -- 150 years ago: A corps of surgeons now occupies the new hospital quarters at the Garrison Hospital on the Rock Island Arsenal. A fence has been installed to enclose the prison hospital.
1889 -- 125 years ago: B. Winter has let a contract to Christ Schreiner for a two story brick building with a double store front on the south side of 3rd Avenue just west of 17th Street. The estimated cost was $4,500.
1914 -- 100 years ago: Germany sent simultaneous ultimatums to Russia and France, demanding that Russia suspend mobilization within 12 hours and demanding that France inform Germany within 18 hours. In the case of war between Germany and Russia, France would remain neutral.
1939 -- 75 years ago: Civil service offices at the post office and the Rock Island Arsenal were swamped as more than 700 youths sought 15 machinist apprenticeships at the Arsenal.
1964 -- 50 years ago: Last night, American Legion Post 246 in Moline figuratively handed over the trousers to a female ex-Marine and petticoat rule began. Olga Swanson, of Moline, was installed as the first woman commander of the post .
1989 -- 25 years ago: The Illinois Quad City Civic Center captured the excitement and interest of a convention of auditorium managers this weekend in Reno, Nev. Bill Adams, civic center authority chairman, said the 10,000-seat arena planned for downtown Moline has caught the eye of construction firms, suppliers, management teams and concession groups.








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