Google tops $600; bank stocks sag

The search giant's big gain pushes tech stocks higher. Slack industrial sales hit GE revenue. Foreclosure worries weigh on bank stocks. Gold and oil fall back.

By Charley Blaine Oct 15, 2010 1:43PM
Charley BlaineUpdated: 6:14 p.m. ET

Financial stocks were banged around all day because of the housing foreclosure mess. Technology stocks soared, especially Google (GOOG), which closed above $600 for the first time since January.

And the rest of the stock market? Well, it just muddled along. As a result, the Dow Jones industrials ($INDU) closed down 32 points to 11,063, with declines in General Electric (GE), Bank of America (BAC) and JPMorgan Chase (JPM) contributing about two-thirds of the decline.
The Standard & Poor's 500 Index ($INX) was up 2 points to 1,176, with seven of the 10 sectors, led by technology, showing gains. Meanwhile, the Nasdaq Composite Index ($COMPX) added 33 points, or 1.4%, to 2,469. The Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks, was up 43 points, or 2.1%, to 2,098.

For the record, Google was up 11.2% to $601.45, its first close above $600 since Jan. 11 and its biggest percentage gain since Oct. 28, 2008.

Google's gain was part of a big day for tech stocks generally.

Apple (AAPL) rose 4.1% to a new high of $314.74, a new closing high. Amazon.com (AMZN) jumped 5.9% to $164.64. And the top three performers among the 30 Dow stocks: Hewlett-Packard (HPQ), up 1.6% to $42.82; Cisco Systems (CSCO), up 1.3% to $23.36, and Microsoft (MSFT), up 1.2% to $25.54. (Microsoft is the publisher of MSN Money.)

Google's third-quarter earnings crushed analyst estimates. The gain also reflected hopes that its Android operating system for mobile phones will translate into big revenue ahead.

Stocks that also moved today:
Separately, former Countrywide Financial Chairman Angelo Mozilo and two defendants reached an agreement with federal regulators to settle civil fraud and insider-trading charges.

The SEC alleged that the defendants hid from the public the problems in Countrywide's portfolio of risky loans. Those problems eventually forced the mortgage giant's 2008 sale to Bank of America, which isn't involved in the SEC suit. 


Mozilo agreed to $67.5 million in penalties and disgorged profits, Bloomberg News reported.


Markets for the week



10/15/2010

10/8/2010

% chg.

YTD chg.
Dow industrials

11,062.78

11,006.48

0.5%

6.1%
S&P 500

1,176.19

1,165.15

0.9%

5.5%
Nasdaq 

2,468.77

2,401.91

2.8%

8.8%
Russell 2000

703.16

693.82

1.3%

12.4%
Crude oil 

$81.25

$82.66

-1.7%

2.4%
(per barrel)











U.S. Dollar Index 

77.268

77.56

-0.4%

-1.2%
10-yr. Treasury

2.58%

2.38%

8.2%

-33.0%
Gold

$1,372.00

$1,345.30

2.0%

25.2%
(per troy ounce)












Dollar up, gold and oil down

As the market struggled, the dollar moved higher against major currencies. Gold settled down $5.60 to $1,372. Crude oil dropped $1.44 to $81.25.

Interest rates moved higher. The 10-year Treasury yield rose to 2.576% from 2.495% on Thursday. The 30-year bond yield hit 4%, up from 3.898% on Thursday.

Stocks end week higher
Stocks finished the week higher. The Dow rose 0.5%, with the S&P 500 up 1% and the Nasdaq up 2.8%, thanks to Google's big gain and Apple's surge over $300 this week.

Apple is up 49.4% for the year, compared with 6.1% for the Dow, 5.5% for the S&P 500 and 8.8% for the Nasdaq. Since it represents more than 20% of the Nasdaq-100, it is the big reason why the index is up 12.8% for the year.

Google's performance and a report showing a surprising gain in retail sales in September should have been enough to give the market greater overall support.

But GE's surprisingly weak revenue and the banks weighed   on the market all day.

And this was no help: Consumer sentiment slipped to 67.9 in October from 68.2 in September, according to the University of Michigan's preliminary look at consumer confidence. The market had been anticipating an increase to 68.5. Lackluster consumer spending has been a source of concern among economists and investors.

Meanwhile, as expected, Federal Reserve Chairman Ben Bernanke told a Boston audience that he considers current conditions "to be a case for further action." Many analysts believe the action will come in November.

Energy prices -- New York close
 

Fri.

Thur.

Month chg.

YTD chg.
Crude oil 

$81.25

$82.69

1.60%

2.38%
(per barrel)











Heating oil

$2.2308

$2.2839

-8.57%

5.45%
(per gallon)











Natural gas 

$3.5350

$3.6570

-8.70%

-36.56%
(per mil. BTU)











Unleaded gasoline

$2.1038

$2.1365

2.89%

2.48%
(per gallon)











Retail gasoline

$2.8330

$2.8280

5.36%

7.35%
(per gallon; AAA)












Industrial sales hold back GE results
The GE problem was that third-quarter earnings beat estimates, but revenue fell 5% to $35.9 billion, falling short of estimates for $37.4 billion. GE shares were off 5% to $16.30.

The company cited slack demand for wind turbines, railroad locomotives and other heavy equipment. For analysts, that cast doubts about the pace of the U.S. recovery.

"I'm a little concerned about the broader manufacturing sector, that this may be a bit of a harbinger," said Peter Sorrentino, portfolio manager at Huntington Asset Advisors in Cincinnati.


The picture will become clear next week when United Technologies (UTX), Caterpillar CAT) and Honeywell (HON) report results.

Profit from continuing operations -- which factors out GE's pruning of its finance arm, primarily the sale of its Japanese consumer lending business -- came to $3.16 billion, or 29 cents a share, up 29% from $2.45 billion, or 22 cents a share, a year earlier. On that basis, GE beat the consensus analyst forecast by 2 cents a share.


The foreclosure mess hits banks
The problem for the banks was increased worries that the foreclosure documentation mess will evolve into something quite serious.

Bank shares have been hit by the growing concern. Bank of America, the nation's biggest servicer of mortgages, was down 4.9% to $11.98 after falling to a 52-week low of $11.74 early in the day. The stock is down 9.6% this week alone. The KBW Banks Index ($BKX) was down about 2.5% to 45.

It is still unclear if the joint probe by the U.S. state attorneys general and other reviews by bank regulators will ultimately reveal evidence of widespread fraud.

"While there will likely be some legal costs stemming from documentation issues, we don't think ultimate losses will be impacted by foreclosure moratoriums," Nomura's Glenn Schorr said.

Given the long timeline and earnings power of these firms, legal and servicing costs will be high, but the banks will earn their way through, he added.

So far, the Obama administration has rejected calls for a nationwide moratorium on foreclosures, but some banks are taking matters into their own hands.

Short hits from the markets -- New York close
 
  Fri.

Thur.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.140%

0.140%

-6.67%

180.00%
5-year Treasury note 

1.186%

1.175%

-8.35%

-55.85%
10-year Treasury note

2.576%

2.495%

2.06%

-32.97%
30-year Treasury bond

3.727%

3.727%

0.81%

-19.69%
Currencies







 

 
U.S. Dollar Index

77.268

76.881

-2.12%

-1.22%
British pound

$1.6036

$1.6015

2.00%

-0.87%
(in U.S. $)











U.S. $ in pounds

£0.6236

£0.6244

-1.97%

0.87%
Euro in dollars

$1.4025

$1.4085

2.68%

-2.15%
(in U.S. $)











U.S. $ in euros

€ 0.7130

€ 0.7100

-2.61%

2.19%
U.S. $ in yen 

81.50

81.44

-2.61%

-12.37%
U.S. $ in Chinese

6.66

6.65

-0.81%

-2.37%
yuan











Canada dollar

$0.989

$0.996

1.78%

4.02%
(in U.S. $)











U.S. dollar 

$1.011

$1.004

-1.85%

-3.96%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,372.00

$1,377.60

4.76%

25.16%
(per troy ounce)











Copper

$3.8390

$3.8155

5.13%

14.72%
(per pound)











Silver

$24.2880

$24.4350

11.31%

44.19%
(per troy ounce)











Wheat 

$7.0450

$7.0075

4.53%

30.10%
(per bushel)











Corn

$5.6300

$5.6725

13.57%

35.83%
(per bushel)











Crude oil 

$81.25

$82.69

1.60%

2.38%
(per barrel)










 

18Comments
Oct 15, 2010 6:52PM
avatar
W/QE no problem for banks stocks will shoot up and bank excex's will be running out the banks w/wheel barrel's full of cash.
Oct 17, 2010 11:42AM
avatar

derfy,

They can't do that....too many broke discouraged former members of the unemployed on the streets. You would end up with a wheelbarrow full of bank exec.

Oct 17, 2010 11:34AM
avatar

dunnunder,

Someone thinks that Google is worth $600. Other folks are just nostalgic for the dot com bubble of the 1990's

Oct 17, 2010 11:29AM
avatar

ZACK 717,

Just think, that those unemployed desperados won't have far to go to rob one

Oct 16, 2010 10:52AM
avatar

is google really worth $600 or is there something else going on here, like maybe the ROBO traders are pumping it up?? may 6th crash.......up they looking at the ROBO traders!

Oct 15, 2010 8:46PM
avatar
 I live in a midwest city with a population of 300,000, high unemployment, many foreclosers and a bank or credit union on every corner. The best place to work here is in a bank. 10 years ago the banking industry here boomed and every bank and credit union built branchs everywhere, and I mean everywhere! If the industry was in such bad shape shouldn't some of these branchs close? Nope! not one. Guess all those fees they charged for years have paid off, FOR THEM!
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[BRIEFING.COM] The stock market ended the holiday-shortened week on a mixed note as the Dow Jones Industrial Average shed 0.1%, while the S&P 500 added 0.1% with seven sectors posting gains.

Equity indices faced an uphill climb from the opening bell after disappointing quarterly results from Google (GOOG 536.10, -20.44) and IBM (IBM 190.04, -6.36) weighed on the early sentiment. Google reported earnings $0.15 below the Capital IQ consensus estimate on revenue of $15.42 ... More


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