Markets Cap Ugly Week With Muted Finale
FOX Business: The Power to Prosper
Failing to prevent a second-straight bearish week on Wall Street, U.S. markets reached the finish line with a mixed verdict on Friday as stocks were unable to maintain an early rally built on positive developments.
Today's Markets
The Dow Jones Industrial Average fell 5.30 points, or 0.04%, to 11863.51, the Standard & Poor's 500 Index gained 3.77 points, or 0.31%, to 1219.52 and the Nasdaq Composite jumped 14.32 points, or 0.56%, to 2555.33.
A eurozone-fueled triple-digit rally on the Dow proved to be unsustainable as the markets landed near session lows. Market sentiment wasn't helped by a midday credit-ratings downgrade threat from Fitch to a slew of European nations, nor Zynga's (NASDAQ:ZNGA) IPO flop.
For the week, the blue chips slumped more than 2.5%, while the Nasdaq Composite suffered a steeper decline of almost 4%. It marked the second-straight week of losses on Wall Street, which continues to have upbeat U.S. economic news be overshadowed by the scary sovereign debt crisis on the other side of the Atlantic.
“It’s tough to paint a positive narrative in the near-term for equities because we’re so uncertain about the pace of change in Europe,” said Nicholas Covas, chief market strategist at ConvergEx.
Still, U.S. markets managed to avoid a knee-jerk selloff after Fitch said it may need to downgrade France, Italy, Spain, Ireland, Italy, Belgium, Slovenia and Cyprus. However, the ratings company underscored concerns about the European sovereign debt crisis, saying a comprehensive solution is "technically and politically beyond reach."
On the other hand, earlier in the day global financial markets cheered after Italy's lower chamber of Parliament approved a crucial package of measures aimed at easing its debt crisis by reassuring the jittery bond markets. In another positive sign, European bonds, especially those with shorter maturities, rallied. For the day, the euro posted a slight advance of 0.13%, bouncing off 11-month lows.
Tech stocks and the Nasdaq Composite managed to post a more healthy advance than the broader markets despite Zynga's disappointing debut. While the online game maker's $1 billion IPO marked the largest U.S. Internet IPO since Google (NASDAQ:GOOG) in 2004, it was alarming to see it break its offer price quickly after opening.
While Adobe Systems (NASDAQ:ADBE) rallied 6% after its earnings beat, BlackBerry maker Research in Motion (NASDAQ:RIMM) plunged another 11% due to its sobering results and a disclosure of another key product delay.
On the economic front, Wall Street received an update on inflation at the consumer level from the Commerce Department, which said U.S. consumer prices were unchanged month-over-month in November, compared with forecasts for a slight rise of 0.1%. Excluding food and energy, prices at the consumer level gained 0.2%, slightly hotter than estimates for 0.1%.
“As counterintuitive as it may sound, the U.S. economy looks like the counterbalance to the ongoing European debt crisis,” said Peter Kenny, managing director at Knight Capital.
Even though the markets remain under pressure from Europe, Wall Street could stand to gain from entering two of the lightest trading weeks of the entire year due to the holidays.
“I would not be surprised if the S&P could rally to be up on the year,” said Covas, noting it is only down less than 2.5% on the year. “On light volume you could get a bounce, but these are purely technical factors.”
In the commodities complex, crude oil fell 34 cents a barrel, or 0.36%, to $93.53. For the week, crude slumped 7.4%, leaving it up just over 2% on the year. Gold settled down $21.00 a troy ounce, or 1.33%, at $1,595.60, but still plunged 8.7% on the week -- its steepest one-week decline since late September.
Corporate Movers
United Rentals (NYSE:URI) inked a $1.87 billion deal to acquire rival equipment rental company RSC Holdings (NYSE:RRR) in a cash-and-stock deal aimed at combining forces and creating synergies. The transaction carries a 58% premium on RSC's Thursday close.
Darden Restaurants (NYSE:DRI) disclosed an in-line 28% drop-off in profits due to deteriorating sales at its Olive Garden restaurants. Revenue increased 6.1% to $1.83 billion, matching estimates.
Global Markets
The U.K.'s FTSE 100 dropped 0.25% to 5387.34, the German DAX slumped 0.50% to 5701.78 and the French CAC 40 declined 0.88% to 2972.30.
In Asia, Japan's Nikkei 225 gained 0.29% to 8401.72 and Hong Kong's Hang Seng leaped 1.43% to 18285.40.