News at a Glance
Stocks End Mixed: Nasdaq rallies on tech.
Housing Surprise: New home sales topped projections.
Game On: Xbox 360 helps Microsoft beat the Street.
Larval Stage: Caterpillar misses estimates.
The Lowdown
Stocks ended mixed on Friday after new economic data that spurred concern over more interest rate hikes by the Federal Reserve. The Dow Jones Industrial Average had lost 16 points at 12487. The Nasdaq gained a point at 2435, and the S&P 500 dipped 2 to 1422.
Durable goods orders rose in December, suggesting some growth in demand. Fresh data from the Commerce Department showed new home sales climbed 4.8% in December, topping economists' estimates. Rather than embracing those reports as good for the manufacturing and housing sectors, traders balked at them, fearing they might trigger another interest rate increase from the Fed next week.
Lukewarm earnings reports from Nasdaq mainstays and two Dow components also helped set the tone. Microsoft beat the Street but earnings declined. Amgen missed income estimates and released some potentially bad news about one its top-selling drugs. Caterpillar and Honeywell also released earnings.
Corporate News
For all the hype over product delays and new competitive pressures, Mircosoft (MSFT) still topped analysts' estimates for its fiscal second quarter. The tech giant recorded a net profit of $2.63 billion, or 26 cents a share, down from $3.65 billion, or 34 cents a share in the year-ago period. Analysts had been expecting the company to post profits of 23 cents a share, but Microsoft defered more revenue than expected on sales of soon-to-be-obsolete versions of Windows and Office that included coupons for free upgrades to Vista and companion applications. Microsoft's Xbox 360 video game console also helped drive sales, even as new consoles from Sony (SNE) and Nintendo stole the holiday headlines.
Biotech leader Amgen (AMGN) missed analysts' estimates for the fourth quarter and reported some unsettling results about its billion-dollar drug Aranesp on Thursday, sending shares south in extended trading. Excluding one-time charges, the company earned 90 cents a share, up from 75 cents a share in the year-ago period, but Wall Street had been looking for 95 cents a share. Adding injury to insult, Amgen disclosed a clinical study that showed Aranesp, a drug designed to treat anemia and kidney failure, led to higher mortality rates among some anemic patients. The company said it was still reviewing the results of the study.
Dow component Caterpillar (CAT) said Friday that fourth-quarter net profit had climbed to $882 million, or $1.32 a share, up from $846 million, or $1.20 a share, in the year-ago period. The construction company missed analysts' estimates and projected flat to 5% growth in 2007 as the housing slump continues to depress domestic demand.
Honeywell (HON), another Dow component, posted a 14% rise in fourth-quarter net income. The manufacturing company said Friday that profits rose to $585 million, or 72 cents a share, up from $514 million, or 61 cents in the fourth quarter of 2005. Honeywell, which makes airplane parts, benefited from an increase in plane orders at large manufacturers, including Boeing (BA).
General Motors (GM) will post a net profit for the fourth quarter, the company said Thursday, however, GM will delay the release of its earnings report originally scheduled for next Tuesday as it sorts out a few tax mistakes and moves to restate results. GM said the restatement should lift the overall bottom line dating back several years. The company now has until March 1 to file its earnings with the Securities and Exchange Commission.
The Economy
New home sales rose 4.8% in December to an annual rate of 1.12 million, up from a revised rate of 1.069 million in November, according to a report released Friday by the Commerce Department. Economists had expected new home sales to have grown to an annual rate of 1.05 million. The report comes a day after existing home sales data for December came in well below expectations and weighed on the broader markets. REPORT
Durable goods orders, a measure of demand, rose 3.1% in December, up from a revised 2.2% in November, according to a report released Friday by the Commerce Department. Economists had expected orders to rise 3.5% last month, but the upward revision to November orders offset the shortfall. REPORT
ReadMe
The Wall Street Journal on The Fed: Here's what we can expect out of the policy statement scheduled to be released next Wednesday. STORY
WatchMe
Joan Rivers Classics Collection: Buy jewelry desgined by a woman whose own bio describes her as "a force of nature." (She also does a mean red carpet.) QVC, 11 a.m.
Power Lunch: Dmitry Shapiro, CEO of Veoh Networks, assesses the true value of a $2.6 million Super Bowl ad. CNBC, 12 p.m.
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