Stocks Bounce After Consumer Confidence Data
NEW YORK (TheStreet) -- The major U.S. averages were mildly higher on Friday after a strong read on American consumer confidence provided a respite from worries about the fiscal cliff and the eurozone.
Stocks pared some of their gains after President Barack Obama addressed the U.S. fiscal cliff at the White House's East Room on Friday afternoon. Congress is expected to begin tackling the issue next week. Obama reiterated his belief that higher taxes for wealthy Americans will be necessary to address the deficit.
At last check, the Dow Jones Industrial Average was adding more than 43 points, or 0.34%, at 12,855. The blue-chip index, which has lost ground in the past two sessions, began the session up only 4.6% in 2012.
Breadth within the Dow was positive with winners ahead of losers, 19 to 11. The leading blue chips were Boeing(:BA), Caterpillar(:CAT), and General Electric(:GE).
The Dow's biggest decliners were Walt Disney(:DIS), UnitedHealth Group(:UNH), and Hewlett Packard(:HPQ).
Shares of Walt Disney fell nearly 6% after the media and entertainment giant posted an in-line quarterly profit after Thursday's closing bell as net income rose 14% year-over-year but revenue came up short of the consensus estimate.
Advancers were outpacing decliners by a roughly 1.1-to-1 ratio on the New York Stock Exchange and a 1.2-to-1 ratio on the Nasdaq. Volume was light, running at 2.36 billion on the Big Board and 1.19 billion on the Nasdaq.
The strongest sectors in the broad market, which was mostly positive, were capital goods, health care, and technology. Transportation and utilities were in the red.
"Concerns over the fiscal cliff are heating up -- a move away from riskier assets and the U.S. dollar as a safe haven -- which means the coming few weeks could be a long slog before the year ends," said Christopher Vecchio, an analyst at DailyFX.
"If bickering between Democrats and Republicans ensues, expect coal this Christmas instead of a Santa Claus rally," Vecchio continued. "We'll get our first insights into the debt negotiations today when the reinvigorated President, fresh off of Tuesday's win, will address the nation on the fiscal cliff shortly after the lunch hour."
The Congressional Budget Office repeated its projections Thursday that if significant tax increases and spending cuts are allowed to go into effect in January they will probably cause the economy to fall back into a recession next year.
The major U.S. equity averages fell sharply again Thursday as fresh worries about the eurozone and fiscal cliff overshadowed upbeat domestic labor market and trade data.
"The euro area has seized defeat from the salivating jaws of victory, and contributed to risk aversion anxieties by raising the possibility that Greece's ongoing problems will not be resolved before the end of the month. It is just 'unnamed official' comments, but markets are in a strange mood," noted Paul Donovan, a global economist at UBS.
Concerns about Greece's stability have returned after reports that the European Union won't decide on whether to provide the next round of bailout funds for the country until sometime next week, even though the Greek parliament on early Thursday had managed to pass by a narrow margin a new, tough austerity package.
Greece's parliamentary vote on the country's budget is expected to take place on Sunday, on the eve of a eurozone finance ministers meeting.
Upbeat data on U.S. consumer confidence extended some cheer to the markets Friday. The read on the University of Michigan Consumer Sentiment Index for November came in at 84.9, the highest level since July 2007. It was predicted by economists to rise to 83 from 82.6.
Still, Andrew Wilkinson, chief economic strategist at Miller Tabak commented that "the rise in consumer confidence while a welcome reading is unlikely to soften the negative tone to trading from fears surrounding the fiscal cliff thrust to the fore after the national election."
In other economic news, the Census Bureau said that wholesale inventories rose 1.1% in September after increasing by an upwardly-revised 0.8% the previous month. Economists were expecting a rise of 0.4%.
The Labor Department said before the market open Friday that import prices rose 0.5% in October, compared with the flat figure expected by economists, as petroleum import costs rose 1.3%.
Export prices were flat, versus the forecast 0.2% increase.
Overseas markets were weak. The FTSE 100 in London closed down by 0.11%, while the DAX in Germany fell 0.58%. Japan's Nikkei average settled down 0.9% on Friday and Hong Kong's Hang Seng closed behind by 0.85% even after data showing better-than-expected increases in Chinese industrial production and retail sales.
Gold for December delivery tacked on $4.90 to settle at $1,730.90 an ounce at the Comex division of the New York Mercantile Exchange, while the December crude oil contract was up 95 cents at $86.04.
The benchmark 10-year Treasury was falling 1/32, raising the yield to 1.623%. The dollar was up 0.25%, according to the U.S. dollar index.
In corporate news, Priceline.com(:PCLN) pulled off a surprise deal late Thursday to acquire Kayak Software(:KYAK) for $1.8 billion in cash and stock, valuing the shares at $40 each.
Priceline shares were down incrementally and Kayak shares were soaring by more than 27.5%.
J.C. Penney(:JCP) shares were off more than 6% after the retailer posted a steeper-than-forecast third-quarter loss driven by deteriorating sales as customers remained very unreceptive to the company's new pricing strategy that is skewed toward everyday low pricing rather than big sales.
The company reported a loss of 93 cents a share on revenue of $2.93 billion versus the loss of 7 cents a share on revenue of $3.27 billion expected by analysts.
Shares of Lions Gate Entertainment(:LGF) were jumping about 13.5% after the motion picture production and distribution company posted much stronger-than-expected fiscal second-quarter results, boosted by the home video release of "The Hunger Games."
Zipcar(:ZIP) shares were soaring by more than 22% after the car sharing network company reported stronger-than-anticipated third-quarter results as its membership rose 18% from a year ago.
Groupon(:GRPN), the online deals company, reported a surprise loss for its third quarter with revenue of $568.6 million missing Wall Street's consensus view of $590.1 million. Groupon shares were plunging nearly 30%.
Allscripts Healthcare Solutions (:MDRX) said Thursday it's exploring strategic alternatives, perhaps selling itself to a third party.
Shares of the provider of electronic health record services were pulling back by more than 2%.
Energizer (:ENR) shares were surging by close to 8% after the consumer products company posted better-than-expected quarterly earnings and full-year profit, as earnings at its personal care unit increased, and it announced a planned 10% cut to its work force.
Array Biopharma (:ARRY) shares were plunging more than 13.5% after company announced plans for a common stock offering.
-- Written by Andrea Tse and Joe Deaux in New York.
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