Wall Street dipped into negative territory Friday morning after a new survey showed consumer sentiment in April declined to a 26-year low and Microsoft's conservative forecast weighed on the tech world.
Today's Market
As of 10:04 a.m. EST, the Dow Jones Industrial Average fell 19.13 points, or 0.15% to 12829.33, the Standard & Poor’s 500 index declined 0.66 points, or 0.05% to 1388.23 and the Nasdaq Composite Index dropped 24.17 points, or 1.00%, to 2404.75. The consumer-friendly Fox 50 lost 2.40 points, or 0.24%, to 989.54.
The early pullback erased some of Thursday's rally, which was triggered by financial stocks, tumbling oil prices and strengthening U.S. dollar helped fuel buying on Wall Street. American Express (AXP) soared 4.3% to lead the blue-chip index early on Friday, helping to offset Microsoft's (MSFT) 4.7% decline.
The market received mixed earnings reports ahead of Friday's opening bell, as
AmEx said its profit declined less-than-expected but was forced to increase its loan loss provisions by 48% amid the weakening economy.
On the other hand,
Microsoft (MSFT) weighed on the tech world after the world's largest software company beat the Street with its third-quarter profit but spooked traders with a conservative fiscal fourth-quarter outlook. The Seattle-based tech giant and Dow member said it profit declined 11% to $4.39 billion, or 47 cents per share, compared to $4.93 billion, or 50 cents, a year ago.
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Tech giants
Intel (INTC) and
IBM (IBM) declined on the Microsoft guidance, falling more than 1% each.
The latest University of Michigan/Reuters consumer sentiment survey put more pressure on Wall Street when it deteriorated to its lowest levels since March 1982.. Sentiment dropped to 62.6 in April, worse than the 63.2 economists were expecting. Wall Street watches these reports carefully as declining sentiment in recent months have pushed consumer spending lower, negatively impacting the nation's economy.
“I think we are in an environment where the economic and headline news will clearly remain negative…but the market will shrug it off. There is no question the tone of the market has turned more positive in the past few weeks," Ted Weisberg of Seaport Securities told FOX Business.
After Friday Wall Street will turn some of its attention toward the Federal Reserve's next monetary policy meeting, set for April 30. Analysts expect the central bank to once again lower interest rates to 2% in an effort to encourage economic growth. However, there is a growing sentiment on Wall Street that the Fed may opt to hold rates steady after this meeting to avoid fanning inflation.
In the commodities sector, crude rebounded Friday morning from its sell-off, picking up $2.40 to $118.46 a barrel in New York. Gold rose $4.50 to $893.90 an ounce.
Corporate Movers
Microsoft (MSFT) Chief Executive Steve Ballmer repeated his stance on his company's bid to acquire tech giant
Yahoo! (YHOO), reiterating that the deal on the table is fair and that he doesn't plan to up it, according to Dow Jones Newswires. "Our bid is quite generous, roughly eighty times earnings...the combination would make a great company," the wire service quoted Ballmer in Madrid. Ballmer also repeated his threat to take the matter directly to Yahoo shareholders in a proxy battle if Yahoo doesn't enter friendly talks by Saturday. Microsoft's deal was initially valued at $44 billion but has since declined in value as Microsoft's stock price has fallen.
Merrill Lynch (MER) is sitting down with private-equity firm TPG to discuss closer ties, including a potential new capital infusion if need be, the Financial Times reported on Friday. TPG executives, who reportedly met with Merrill Chief Executive John Thain on Monday, are hoping the firm will get the first shot at a future capital injection if Merrill needs more capital, the newspaper reported.
General Motors (GM) fell 3% after the auto maker's credit outlook was downgraded to "negative" from "stable" by Moody's. The ratings agency cited concerns about GM's financial arm
GMAC and its subsidiary
ResCap. On the upside, The Wall Street Journal reported that the United Auto Workers union is expected to extend a deadline on a potential strike at a Chevy Malibu plant.
Ford (F) declined 5% just a day soaring almost 12% on a surprising profit of $100 million in the first quarter. The auto maker fell on an analyst downgrade from JPMorgan Chase (JPM), which cut the stock to "neutral" from "overweight," saying the recent rally brought it back to its true value. However, the JPMorgan analyst did up his 2008 earnings estimate for Ford to now account for a loss of 75 cents per share from $1.05.
Ericsson (ERIC) soared 13.7% after the Swedish wireless equipment maker released first-quarter results that were better-than-expected. Ericsson's profit slid 55% in the period, hurt by higher costs related to acquisitions, restructuring and research and development. Also, the weaker dollar hurt Ericsson's results.
News Corp.'s (NWS) bid to acquire Long Island Newsday from
Tribune Company for a reported $580 million could face political hurdles in addition to regulatory ones, The Wall Street Journal reported. The deal may be hit by opposition from politicians and public-interest groups, on top of opposition from New York Daily News owner Mortimer Zuckerman, the newspaper reported. A potential deal for Newsday could be complicated by News Corp.'s ownership of The Journal, the New York Post, New Jersey television station WWOR-TV and New York-based WNYW. News Corp. is also the parent of FOX Business.
Virgin Mobile (VM) jumped 14.3% on Friday thanks to an analyst upgrade at
Bear Stearns (BSC). According to Dow Jones Newswires, Bear upped the stock to "peer perform" from "underperform," citing potential boosts from the economic stimulus rebates, new plans and distribution and cost savings from a deal with
Sprint (S). Also, Bear says Virgin Mobile's outlook is conservative.
World Markets
The Dow Jones Euro Stoxx 50, a index tracking the 50 largest companies of Europe, gained 33.16 points, or 0.88%, to 3795.12. The FTSE 100, London's benchmark index, rose 10.70 points, or 0.18%, to 6061.40.
France's CAC 40 Index rose 53.30 points, or 1.08%, to 4982.85 and Germany's DAX picked up 76.26, or 1.12%, to 6897.58.
Japan's Nikkei 225 Index gained 322.60 points, or 2.38%, to 13863.47. Hong Kong's Hang Seng Index fell 164 points, or 0.64%, to 25516.78.
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