Google, deal talk mask market stresses

Updated: 8 p.m. ET

If you're a bull, there were two stories to cheer about today: Google (GOOG) and deals. The rest of the stock market wasn't much to write home about.

Google's blowout earnings sent its shares up 13% to $597.62 today and were  responsible for more than half of the Nasdaq-100 Index's ($NDX.X) gain.

Shares of oil-and-gas producers were sharply higher after BHP Billiton (BHP) agreed to buy natural-gas producer Petrohawk Energy (HK) for $12.5 billion, and takeover speculator Carl Icahn bid $10.2 billion to take over Clorox (CLX), the venerable maker of bleaches, cleaners and related products.

Petrohawk shares were up 62.8% to $38.23 on the news. Eight of the top 10 performers in the Standard & Poor's 500 Index ($INX) were natural-gas-related stocks.

Without those catalysts and options expirations, the market probably would have finished flat. The Dow Jones industrials ($INDU) closed up 43 points to 12,480, with half of the 30 stocks higher.  The S&P 500 Index had added 7 points to 1,316, and the Nasdaq Composite Index ($COMPX) had added 27 points to 2,790. The Nasdaq-100 was up 32 points to 2,357. Google was responsible for half the gain by itself.

The market ended the week lower after two weeks of gains. The Dow dropped 1.4%, with the S&P 500 off 2.1% and the Nasdaq down 2.5%.

Next week will feature continued bitter wrangling over the U.S. debt debt and a host of earnings from the likes of Apple (AAPL), Bank of America (BAC), General Electric (GE) and McDonald's (MCD).

Keeping the market in check was the continuing bitter wrangling over the U.S. debt ceiling. Standard & Poor's joined Moody's in warning about a downgrade. One smaller ratings firm, Weiss Research, actually downgraded U.S. debt.

Meanwhile, there was some mediocre economic news, including disappointing reports on consumer sentiment and manufacturing.

In addition, Citigroup (C) shares were lower, despite better-than-expected​ second-quarter earnings.

Markets for the week
			7/15/2011			7/8/2011			% chg.			YTD chg.
Dow Industrials			12,479.73			12,657.20			-1.40%			7.79%
S&P 500			1,316.14			1,343.80			-2.06%			4.65%
Nasdaq			2,789.80			2,859.81			-2.45%			5.16%
Russell 2000			828.78			852.57			-2.79%			5.76%
Crude oil			$97.24			$96.20			1.08%			6.41%
(per barrel)
U.S. Dollar Index			75.52			75.51			0.01%			-$0.05
10-yr. Treasury			1/0/1900			1/0/1900			-3.58%			-$0.12
Gold			$1,590.10			1,541.60			3.15%			$0.12

Natural-gas stocks jump on Petrohawk news
The deals were exciting. BHP Billiton, one of the world's largest mining companies, is trying to get into the U.S. natural-gas business in a big way. Petrohawk, whose revenue was about $1 billion in 2010, is a sizable player in that business, even if it was founded only in 2003.

BHP is assuming big demand gains for natural gas, although right now the market is glutted.

Nonetheless, the deal has investors looking around for the next big deal in gas. So, Range Resources (RRC) jumped 12.1% to $61.78. Pioneer Natural Resources (PXD) rose 10.4% to $95.03. Cabot Oil and Gas (COG) is up 9.3% to $68.43.

Clorox shares, meanwhile, were up 8.9% to $74.55 after Icahn announced his bid. Most of Wall Street believes Icahn is simply trying to get Clorox to sell out to another consumer products company, like Procter & Gamble (PG)., Unilever (UN) or Colgate-Palmolive (CL). Icahn rarely takes over the management of companies.

Google is the day's star 

Google shares were up 12.8% to to $596.81 after the Internet search giant easily beat Wall Street's expectations late Thursday with a quarterly profit of $8.74 a share on revenue of $6.92 billion. Analysts had been looking for earnings of $7.85 a share on revenue of $6.55 billion.

All of Wall Street was warbling praise of Google today. Paid clicks were up, along with revenue per click. There were lots of predictions the stock was headed to $650.

Apple, which reports quarterly results on Tuesday, was up 2% to $364.92. Microsoft, which reports after Thursday's close, added 1.2% to $26.78. The gain was tops among Dow stocks. (Microsoft publishes MSN Money.)

Energy prices -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Crude oil (-CL)			$97.24			$95.69			1.91%			6.41%
(per barrel)
Heating oil (-HO)			$3.1180			$3.0849			5.83%			22.58%
(per gallon)
Natural gas (-NG)			$4.5460			$4.3780			3.93%			3.20%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.1293			$3.1248			5.39%			27.56%
(per gallon)
Brent crude			$117.26			$116.97			4.25%			23.76%
(per barrel)
Retail gasoline			$3.6670			$3.6550			3.56%			19.37%
(per gallon; AAA)

Crude oil, gold move higher
Crude oil (-CL) settled up $1.55 to $97.24 a barrel in New York. Brent crude for September delivery in London was up 33 cents to $117.30. AAA's Daily Fuel Gauge report showed gasoline nationally averaging $3.667 a gallon, up 12.6 cents since June 30.

Gold (-GC) for August delivery settled up 80 cents to $1,590.10 an ounce. Silver (-SI) was up 38 cents, or 1%, to $39.07 an ounce. For the week, gold rose 3.2%; silver was up nearly 7%.

The dollar was off slightly against major currencies. The 10-year Treasury yield was down slightly to 2.908%.

Despite the histrionics coming from Republicans and Democrats, the financial markets still see the odds of a U.S. default on its debt after Aug. 2 as slim to none. A deal involving some $1.5 trillion in spending cuts is starting to come together, although it's not clear if the hard-core Tea Party members of the House of Representatives will go along with it.

Citigroup sees a profit gain; shares slip
Citigroup shares fell 1.6% to $38.38. The decline was part of a broad decline of bank stocks today.

The company earned $3.34 billion, or $1.09 a share, up from $2.7 billion, or 90 cents, a year ago. Analysts had expected 97 cents. The gains were powered by a 61% increase in investment banking revenue -- the fees collected in facilitating various deals -- and fewer losses tied to troubled assets.

Because more loans were performing better, the company was able to reduce its loan-loss reserve by $2 billion -- all of which flowed to the bottom line.

But the company, like many financial companies, is struggling to see growth overall. Total revenue fell 1% to $16.3 billion. And that why the stock fell

The results are similar to those reported Thursday by JPMorgan Chase (JPM).

Citigroup suffered huge losses from subprime mortgages that nearly killed the company. It replaced most of its management in 2008 and needed a federal government bailout in 2009.

Seventeen of 24 stocks in the KBW Philadelphia Bank Index ($BKX) were lower. The index slipped 0.3% to 46. Bank of America (BAC), which reports Tuesday. Its close of $10 was down 0.7% on the day and a 52-week low.

News Corp.'s Brooks resigns
Shares of Rupert Murdoch's News Corp. (NWSA) were up 1.3% to $15.64 after initially falling as much as 3.6% after Rebecca Brooks resigned as CEO of the company's British newspaper group.

As chief of News International, Brooks managed the company's News of the World tabloid, which shut down after Sunday's edition in the wake of accusations that the paper not only hacked into voicemail accounts of celebrities and members of the royal family, but also crime and terrorism victims as well.

The outrage forced News Corp. to withdraw its bid for the 60% of British Sky Broadcasting it doesn't own.

After the close, Lee Hinton, who was CEO of the News Corp.-owned Dow Jones & Co., resigned. Hinton had headed News Corp.'s News International business in Britain when the phone-hacking allegations roiling the media empire first arose.

Murdoch and his son James are to testify about the scandal before Parliament next week.

Shares have fallen 13.7% since July 5.

The economy is still struggling

Consumer sentiment weakened in July, according to the University of Michigan's preliminary reading. The consumer sentiment index fell to 63.8, from June's level of 71.5. Economists had been projecting a milder decline, to a reading of 71.4.

Consumer prices fell 0.2% in June after rising 0.2% in May, according to the Labor Department's consumer price index. Economists had anticipated a decline of 0.1%. The core rate, which excludes volatile food and energy costs, rose 0.3% in June after similar growth in May. Core CPI was expected to inch up by 0.2%, according to Briefing.com.

Besides the dismal consumer sentiment report, there were disappointments on manufacturing.

The Federal Reserve Bank of New York said manufacturing activity in New York State  improved slightly in July, rising to a reading of minus 3.76, from minus 7.79 in June. But analysts had expected the Empire State Manufacturing Survey to turn positive.

Separately, the Federal Reserve said industrial production rose 0.2% in June, meeting expectations, after dipping 0.1% in May. Capacity utilization, meanwhile, held at May's level of 76.7%. Economists had forecast a slight increase to 76.8% in June.

"It's pretty clear that the economy had not started to pull out of its 'soft patch' in June," Paul Ashworth, chief U.S. economic correspondent for Capital Economics, wrote clients today.

Short hits from the markets -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.010%			0.010%			-50.00%			-91.67%
5-year Treasury note			1.439%			1.488%			-17.96%			-28.62%
10-year Treasury note			2.908%			2.944%			-7.92%			-12.01%
30-year Treasury bond			4.251%			4.242%			-2.99%			-2.54%
Currencies
U.S. Dollar Index			75.52			75.562			1.19%			-4.75%
British pound			1.6137			1.6150			0.69%			3.40%
(in U.S. $)
U.S. $ in pounds			£0.620			£0.619			-0.69%			-3.29%
Euro in dollars			$1.41			$1.42			-2.31%			5.74%
(in U.S. $)
U.S. $ in euros			€ 0.707			€ 0.707			2.36%			-5.43%
U.S. $ in yen			79.24			79.12			-2.06%			-2.61%
U.S. $ in Chinese			6.48			6.46			0.35%			-1.98%
yuan
Canada dollar			$1.049			$1.042			1.09%			4.53%
(in U.S. $)
U.S. dollar			$0.954			$0.959			-1.08%			-4.33%
(in Canadian $)
Commodities
Gold (-GC)			$1,590.10			$1,589.30			5.81%			11.87%
(per troy ounce)
Copper (-HG)			$4.413			$4.380			3.05%			-0.76%
(per pound)
Silver (-SI)			$39.0710			$38.6940			12.17%			26.29%
(per troy ounce)
Wheat (-ZW)			$6.9475			7.07			18.81%			-12.53%
(per bushel)
Corn (-ZC)			$7.0125			6.9075			11.49%			12.65%
(per bushel)
Cotton			$1.0146			1.0635			-36.50%			-29.94%
(per pound)
Coffee			$2.5355			2.5735			-4.45%			5.43%
(per pound)
Crude oil (-CL)			$97.24			$95.69			1.91%			6.41%
(per barrel)