Mixed week for US stocks

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Reuters

File photo: Lucas Jackson

New York -

US stocks finished the week with solid gains Friday, but it was not enough to lift the tech-rich Nasdaq Composite Index into the black for the week.

The Nasdaq, which has underperformed compared to the other two leading indices since early March, fell 52.03 (1.26 percent) for the week to 4,071.87.

The S&P 500 slipped 2.66 (0.14 percent) to 1 878 48, while the Dow Jones Industrial Average rose 70.45 (0.43 percent) to 16 583.34.

The week was relatively light in terms of economic indicators. US Federal Reserve Chair Janet Yellen made a pair of appearances before congressional panels, reiterating a fairly upbeat outlook for the economy, while highlighting the need to keep benchmark interest rates low.

Investors also kept an eye on continuing violence in Ukraine, where separatists in the east of the country plan to go ahead with an independence vote Sunday.

Alan Skrainka, chief investment officer at Cornerstone Wealth Management, said the week's most striking development was the decline in the Nasdaq, which indicates investors are still worried that high-flying tech stocks are overvalued.

“We continue to see a rotation out of the Internet stocks into some of the more traditional stocks that may benefit from the improvement in the economy,” Skrainka said.

Investors fear “they own the wrong stocks,” he added.

Some of the stocks most closely identified with the tech sector's surge endured some ugly moments.

Twitter sank nearly 18 percent to an historic low Tuesday after the expiration of a so-called lockup period, which banned sales by company insiders after its public offering. Twitter finished the week down 17.9 percent.

Shares Tesla Motors, another high-flyer, sank after the electric-car manufacturer gave a disappointing outlook on second-quarter deliveries and profits. Tesla finished the week 13.6 percent lower.

Other technology names to suffer big declines following disappointing earnings reports included AOL (-13.4 percent for the week) and FireEye (-33.8 percent).

Peter Wahlstrom, senior analyst for technology at Morningstar, said the earnings season, now nearly finished, was “lackluster” for the tech sector and filled with “inconsistent” results.

“You're looking for broad-based strength. You're not seeing that,” Wahlstrom said.

“There are areas that are performing well. There are areas that are not performing well and, on average, investors would have wanted more.”

In other corporate news, US retailer Target announced that chief executive Gregg Steinhafel was stepping down in the wake of a huge data breach, while Italian auto giant Fiat Chrysler unveiled an ambitious $7 billion plan to relaunch the high-end and sporty Alfa Romeo line.

In deal news, French group Publicis and Omnicom of the United States announced they had abandoned merger talks on what would have formed the world's largest advertising company.

The two sides fought over who would be the combined firm's chief financial officer and which company would legally be deemed the acquirer for a transaction that had been heavily billed as a “merger of equals,” according to a report in the Wall Street Journal.

Less resolved at week's end was the status of a potential acquisition by US pharmaceutical giant Pfizer of British company AstraZeneca, which has so far rejected three requests to enter talks. Pfizer chief executive Ian Read will try to quell opposition to the deal in Britain at an appearance Tuesday before a British parliamentary panel.

Analysts say Pfizer will need to raise its bid of $106 billion if it hopes to succeed in acquiring the British company.

Next week's agenda also includes earnings from retail behemoth Wal-Mart Stores and tech giant Cisco. Economic reports include housing starts, retail sales and industrial production. - Sapa-AFP


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