Stocks turned in a relatively lackluster performance during trading on Friday, as traders seemed somewhat reluctant to make any significant moves. A mixed reaction to the latest batch of earnings news contributed to the choppy trading seen throughout the session.
While the Nasdaq and the S&P 500 closed nearly flat, the Dow ended the session firmly in positive territory. The Dow climbed 96.50 points or 0.8 percent to 12,720.48, while the S&P 500 edged up 0.88 points or 0.1 percent to 1,315.38 and the Nasdaq slipped 1.63 points or 0.1 percent to 2,786.70.
Despite the mixed performance on the day, the major averages all moved notably higher for the week. The Dow rose by 2.4 percent to a six-month closing high, while the Nasdaq jumped by 2.8 percent and the S&P 500 advanced by 2 percent.
While traders largely reacted positively to quarterly results from tech giants Microsoft (MSFT), IBM (IBM), and Intel (INTC), internet search giant Google (GOOG) fell sharply in reaction to its results.
Shares of Microsoft surged up by 5.7 percent on the day after the software giant reported better than expected second quarter earnings on revenues that came about in line with estimates. The gain lifted Microsoft to its best closing level in well over a year.
IBM and Intel also posted notable gains after reporting better than expected quarterly results, advancing by 4.4 percent and 2.9 percent, respectively. Shares of Intel reached a four-year closing high.
Meanwhile, Google came under significant selling pressure, falling by 8.4 after reporting weaker than expected fourth quarter results.
General Electric (GE) also spent much of the session in negative territory after releasing its quarterly results but ended the day flat.
While GE reported fourth quarter adjusted earnings of $0.39 per share, a penny above analyst estimates, the company's sales fell 8 percent to $38 billion, below expectations for $40 billion.
On the economic front, the National Association of Realtors released a report showing that existing home sales rose for the third consecutive month in December, reaching their highest level in almost a year.
NAR said existing home sales rose 5.0 percent to an annual rate of 4.61 million in December from a downwardly revised 4.39 million in November. With the continued increase, existing home sales rose to their highest annual rate since coming in at 4.64 million in January of 2011.
Traders also kept an eye on developments in Greece, where the government is reportedly close to reaching a deal with private creditors in order to avoid a disorderly default.
Sector News
Despite the lackluster performance shown by the broader markets, significant strength was visible among software stocks. Reflecting the strength in the software sector, the Dow Jones Software Index jumped 2.5 percent to a two-month closing high.
While Microsoft helped to lead the sector higher after reporting its quarterly results, Sapient (SAPE) and Tibco (TIBX) also posted strong gains.
Brokerage stocks also showed a strong move to the upside over the course of the trading day, driving the NYSE Arca Broker/Dealer Index up by 1.4 percent. The gain extended a recent upward move by the index, which ended the session at its best closing level in almost three months.
Electronic storage, banking, and commercial real estate stocks also saw notable strength on the day, although buying interest was relatively subdued.
Meanwhile, housing stocks came under considerable selling pressure, dragging the Philadelphia Housing Sector Index down by 1.4 percent. The weakness in the sector came in spite of the positive existing home sales report.
Significant weakness also emerged among biotechnology stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Biotechnology Index. Pharmaceutical, health insurance, and trucking stocks also moved to the downside on the day.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved to the upside during trading on Friday, benefiting from overnight strength on Wall Street. Japan's Nikkei 225 Index advanced by 1.5 percent, while Hong Kong's Hang Seng Index rose by 0.8 percent.
Meanwhile, the major European markets saw modest weakness on the day. The U.K.'s FTSE 100 Index, the German DAX Index, and the French CAC 40 Index all edged down by 0.2 percent.
In the bond market, treasuries moved notably lower on the day, extending the downward move seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.6 basis points to 2.028 percent.
Looking Ahead
While the financial situation in Europe is likely to attract some attention next week, trading could also be impacted by the outcome of the Federal Reserve's latest monetary policy meeting and the Commerce Department's initial report on U.S. fourth quarter GDP.
Traders are also likely to keep an eye on President Obama's State of the Union address as well as reports on durable goods orders, new home sales, and weekly jobless claims.
On the earnings front, McDonald's (MCD), DuPont (DD), Apple (AAPL), Johnson & Johnson (JNJ), Verizon (VZ), Boeing (BA), 3M (MMM), AT&T (T), Caterpillar (CAT), Chevron (CVX), and Procter & Gamble (PG) are among the companies due to report their quarterly results next week.
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