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US stocks cap strong week with mixed finish

STOCKS ended little changed yesterday but held onto an enormous rally for the week. Investors are looking to another flood of corporate earnings reports next week to provide more signs that the US economy is healing.

The Dow Jones industrials and the Standard & Poor's 500 index posted their best weekly performance since the week ending March 13, when the market's spring rally began. All the major stock indexes rose about 7 percent for the week's large batch of reports includes dow components caterpillar inc., dupont and merck & co.

"We had a big run-up earlier in the week and I think people would just as soon go into the weekend without any major disruptions in their exposures," said Jeff Buetow, managing partner at Innealta Portfolio Advisors. "I think people want the market to go up."

Solid results from Goldman Sachs Group Inc. and Intel Corp. spurred buying early in the week. But not all the results yesterday were strong, holding the market in place.

Yesterday, Bank of America Corp. and Citigroup Inc. became the latest banks to report big profits but also weakness in their loan portfolios. General Electric Co. beat earnings forecasts, but its revenue came up short.

"The important thing is these earnings results, while not all entirely positive, are beginning to show some signs of stabilization," said Tom Kersting, an analyst at Edward Jones.

The Dow Jones industrials rose 32.12, or 0.4 percent, to 8,743.94. The broader Standard & Poor's 500 index slipped 0.36, or less than 0.1 percent, to 940.38, while the Nasdaq composite index rose 1.58, or 0.1 percent, to 1,886.61.

The number of stocks that fell narrowly outpaced those that rose on the New York Stock Exchange, where trading volume came to 1.3 billion shares compared with 1.2 billion traded Thursday.

Financial stocks mostly fell, weighing on the broader market. Investors have been encouraged by strong profits from large banks, but there are still signs that the recession's grip hasn't eased as much as hoped, such as higher loan defaults.

BofA, which has struggled more than some of its peers from loan losses, beat Wall Street estimates just as Goldman Sachs and JPMorgan Chase & Co. did earlier in the week. However its profit fell from a year earlier as losses from delinquent loans continued to climb. BofA fell 28 cents, or 2.1 percent, to US$12.89.

Citigroup, another troubled bank, surprised Wall Street with a US$3 billion profit instead of the big loss analysts had expected, but results were boosted by the sale of a majority stake in its Smith Barney brokerage. Its shares fell a penny to US$3.02.

One exception was CIT Group Inc., whose shares jumped 29 cents to 70 cents, on speculation that the troubled lender might be able to avoid bankruptcy. Its shares had tumbled 75 percent on Thursday after negotiations with federal regulators about a possible rescue fell through.

GE's shares dropped 6 percent after the conglomerate said its earnings fell 49 percent on losses at its financial unit and weakness in industrial businesses. The profits topped forecasts, but revenue came in US$3 billion below estimates. The stock lost 75 cents to US$11.65.

The reports followed mixed results from Google Inc. and IBM Corp. late Thursday.

Homebuilders' shares climbed after an upbeat reading on the housing market. Construction of new homes and apartments jumped 3.6 percent in June to the highest level in seven months, beating economists' estimates. Building permits climbed 8.7 percent, also beating forecasts.

Shares of Hovnanian Enterprises Inc. rose 8 cents, or 3.3 percent, to US$2.53, while DR Horton Inc. rose 26 cents, or 2.7 percent, to US$9.90.

The market's moves were jagged this week, with modest gains coming after big surges. Influential banking analyst Meredith Whitney got the market off to a roaring start on Monday after raising her view on Goldman, stoking hopes that financial companies would show more signs of healing.

But the market's response to Goldman's actual report the following day was somewhat subdued amid mixed economic data. Strong earnings and an upbeat forecast from Intel pulled more investors into the market on Wednesday, and hope for more good earnings from the technology sector stirred buying again on Thursday.

This week's upward move has temporarily halted a decline that began in mid-June as investors worried the 40 percent jump in stocks this spring was overdone. Analysts said it was a healthy sign that the market was taking a breather yesterday.

"I think it's very constructive that we're taking a pause here and not heading back down," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research.

Sparks said it's too early to say whether this week will be representative of the rest of earnings season. Next week's large batch of reports includes Dow components Caterpillar Inc., DuPont and Merck & Co.

Bond prices fell. The yield on the benchmark 10-year Treasury note rose to 3.66 percent from 3.58 percent late Thursday.

The Russell 2000 index of smaller companies fell 2.80, or 0.5 percent, to 519.22.


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