Wall Street closed out an impressive week with a mixed performance Friday after disappointing high-tech earnings punctured some of investors' enthusiasm over better-than-expected bank earnings reports. But the major indexes still ended the week with big gains, the result of rising optimism about the troubled financial sector.
The market was clearly pleased when Citigroup Inc., while reporting a second-quarter loss Friday morning, beat analysts' forecasts and joined Wells Fargo & Co. and JPMorgan Chase & Co. in delivering stronger results than the market anticipated. But investors who ecstatically sent the Dow Jones industrials soaring by more than 480 points over Wednesday and Thursday were brought back down to earth by results from Google Inc., Microsoft Corp. and Advanced Micro Devices Inc.
Google's results were lower than expected, the result of the weakening economy hurting advertising revenue, while Microsoft missed forecasts by a penny. Also, AMD's chief executive stepped down after the chip maker posted a wider-than-expected loss.
Still, the market that has hungered for good news about financial companies after a year-long credit crisis got it from Citigroup. The banking company reported a $2.5 billion second-quarter loss due to writedowns tied to deteriorating credit markets. The results surpassed projections, and helped to mitigate some of the market's concerns following a big loss from Merrill Lynch & Co. reported late Thursday.
It was a good sign to some analysts that the market didn't sell off sharply after two straight days of hefty gains.
“If you look at the fundamentals, not a lot of changes in the fundamentals, but you had the financial crisis come to a head,” said Philip Dow, managing director of equity strategy at RBC Dain Rauscher. “This was a pivotal week that we just went through, one that perhaps marked a bottom for the financial crisis. That doesn't mean we're about to have a bull market, but maybe a break in the pronounced selling that's been going on.”
More banks are among the companies reporting next week: Wachovia Corp., Washington Mutual Inc. and Bank of America Corp. And hundreds of other big corporations will also release results, keeping the market on edge as investors try to determine whether an economic rebound might be in the offing.
The Dow rose 49.91, or 0.44 percent, to 11,496.57.
For the week, the Dow rose 3.57 percent, the Nasdaq increased 1.95 percent, and the S&P rose 1.71 percent.
Financial stocks were mixed. Merrill rose 18 cents to $30.91, after its wider-than-expected loss, while Citigroup added $1.38, or 7.7 percent, to $19.35 after its better-than-anticipated loss.
Citigroup was the latest big bank to quell Wall Street's worries about a financial sector implosion. Citigroup, the nation's largest banking company by assets, lost the equivalent of 54 cents per share in the April-June period. In the same timeframe last year, the bank earned $6.23 billion, or $1.24 per share.
The shortfall was tamer than the 66-cent-per-share loss that analysts, on average, were expecting, according to Thomson Financial.
But it's hard to get too enthusiastic about clearing a low bar. It was Citi's third straight quarterly loss and neither JPMorgan nor Wells Fargo managed to notch a profit gain compared to last year. Meanwhile, brokerage Merrill Lynch reported a wider-than-expected quarterly loss.