FOX Business: The Power to Prosper
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Despite the Dow's lethargic performance on the day, the blue-chip index powered 422 points higher this week, marking its fifth straight weekly gain as it heads for the best monthly performance in 24 years.
Traders took a breather on Friday following a very strong showing in the prior session. Volume on the New York Stock Exchange was much lighter than it was on Thursday when the Dow zoomed 340 points to the upside.
Consumer discretionary shares took the biggest losses by a wide margin after Whirlpool (WHR), the biggest appliance manufacturer, pared back its full-year profit estimates and announced job cuts. Meanwhile, miners performed the strongest on the back of a big rally in copper futures.
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Despite falling share prices Friday, the markets are headed for their best October performance on record, as easing European tensions, and generally upbeat corporate earnings have boosted traders' confidence. Indeed, this week's rally knocked most major market indices into the black for 2011. The Dow, S&P, and Nasdaq are all trading at their highest level in three months.
All eyes are still fixed on Europe, however, even after policymakers Thursday crafted a plan to tackle the region's debt crisis that has threatened some of the world's biggest economies. Doubts still remain among analysts as to whether the euro zone's $610 billion rescue fund, even after substantial leveraging, will be enough to tackle future sovereign debt crises, particularly if they strike big economic players, like Italy.
The currency bloc is hoping China may make an investment in the fund, taking advantage of its strong position in currency markets. However, European and Chinese leaders downplayed that notion on Friday, according to several media reports from Asia and Europe.
Additionally, Spiegel, a major German newspaper, reported that German courts filed a temporary injunction limiting the country's parliament from quickly releasing funds for the rescue fund, potentially presenting another setback.
The euro fell 0.1% to $1.417 while European blue chips edged slightly lower.
Traders also had a slew of corporate and economic news on the domestic front to parse through.
Consumer sentiment ticked higher in late October, according to a private survey. The final reading of the Reuters/University of Michigan gauge of consumer sentiment checked in at 60.9, higher than a preliminary reading of 57.5, and topping estimates of 58. Additionally, the expectations and current conditions sub-indices rose to the highest level since July.
U.S. personal spending rose 0.6% in September from August, in line with estimates, while personal income rose 0.1%, short of estimates of 0.3%.
Analysts will be paying close attention to the state of consumers as the key holiday shopping season draws near. Retailers, such as Best Buy (BBY), may be particularly swayed by these reports. These data come on the heels of a report showing the economy grew at the fastest pace in a year in the third quarter of 2011.
Pharmaceutical giant Merck (MRK) posted third-quarter profits of 94 cents a share, excluding one-time charges, on revenue of $12 billion, topping estimates on the top and bottom line. Whirlpool said it plans on slicing more than 5,000 jobs, which equates to roughly 10% of its workforce, as it has seen its sales grow more slowly than expected. The world's largest appliance maker also trimmed its full-year earnings forecast.
Also on the corporate front, Rochdale Securities' Dick Bove, an influential banking analyst, raised his rating on Goldman Sachs (GS) from neutral to buy, and bumped up the price target to $135 from $115.
Energy futures were in the red following strong gains in the prior session. Oil prices, however, soared 6.8% on the week -- the biggest gain on a percentage basis since February. Light, sweet crude fell 68 cents, or 0.68%, to $93.32 a barrel. Wholesale RBOB gasoline slipped 6 cents, or 2.2%, to $2.68 a gallon.
In metals, gold fell 50 cents, or 0.03%, to $1,747 a troy ounce. However copper soared 5.8% -- having its best week since the metal began trading in 1988. Copper is often seen as an indicator of global economic sentiment because of its varied uses in industry.
Yields on government debt moved lower. The benchmark 10-year note yielded 2.329% from 2.402%.
Chevron's (CVX) quarterly profits topped Wall Street's expectations, however, the oil behemoth's sales fell well short of forecasts.
European blue chips fell 0.18%, the English FTSE 100 dipped 0.2% to 5,702 and the German DAX fell 0.2% to 6,346.
In Asia, the Japanese Nikkei 225 jumped 1.4% to 9,050 and the Chinese Hang Seng soared 1.7% to 20,019.