- The Washington Times - Saturday, January 24, 2009


Wall Street closed mixed Friday, boosted in part by Google’s hefty earnings but dragged down by transports and forecasts of unfavorable reports from the industrial sector next week because of the global recession.

At the close, the Dow Jones Industrial Average dropped 45.24, or 0.56 percent, to 8077.56. The tech-heavy Nasdaq rose 11.80, or 0.81 percent, to 1477.29. The broader Standard & Poor’s 500 eked out an increase of 0.18, or 0.02 percent, to 827.68.

The market rallied by mid-session after opening lower because of strength in commodities, technology and financial stocks, with the Dow rebounding from a dip below 8,000. The tech stocks got a boost from Google, which reported Thursday that it earned $5.10 a share during the fourth quarter, besting the $4.95 expected by analysts.

Light, sweet crude oil, which was down at the open, spiked later in the day to close at $45.97 a barrel on the New York Mercantile Exchange, up $2.30.

Financial stocks, which generally have dragged down the markets since the beginning of the year because of concerns about whether some of the banks can make it through the worsening recession, held their own. Fully 25 percent of the financial stocks have fallen 75 percent or more in the past year, CNBC said.

The financials have completed reporting their earnings for the final three months of 2008. But bleak news lay on the horizon because profits from the industrial sector, which reports next week, are likely to be down, a result of the recession worldwide.

The transports component of the Dow dropped 5.8 percent because of the slowdown in the use of railroads, again because of the recession.

Britain officially sank into recession with the news that its economy shrank 1.5 percent in the final three months of 2008 following a contraction of 0.6 percent in the third quarter, confirming that the U.S. economic downturn is spreading worldwide. The fourth quarter shrinkage marked the worst for Britain since 1980.

The official definition of a recession is when a country’s economy contracts for two successive three-month periods.

Harley-Davidson Inc., maker of what perhaps is America’s favorite motorcycle, said it will cut 1,100 jobs over two years, consolidate two engine and transmission factories in Milwaukee into its facility in Menomonee, Wisc., and cut back its paint and frame operations in York, Pa., because of a sales slowdown.

Xerox Corp. said its fourth quarter earnings fell to $265 million, or 30 cents a share, from a $382 million profit, or 41 cents a share, a year earlier. Analysts had expected the copier maker to post a 34-cent profit, according to a survey by Thomson Reuters.

Xerox announced last year that it would cut 3,000 jobs to save $200 million a year.

Investors appear to be holding back from putting their money into the stock market, and Ray Williams, CEO of Prestige Wealth Management Group, of Pennington, N.J., told CNBC it was because of the “fear factor.”

“People have money to spend, but they’re afraid to,” he said. “They’re concerned about [corporate] earnings going forward.”

Concerns about the future of the banking industry and corporate earnings that have been lower than analysts have been predicting have been a drag on the markets since the beginning of the year, creating a gloom-and-doom atmosphere that first hit Wall Street during the financial crisis last fall.

The bleak outlook comes as President Obama is trying to get his $825 billion economic stimulus package through the House and is running into opposition from Republicans, who object that the plan is too costly and does not contain enough tax cuts.

More jobs were on the chopping block as motorcycle builder Harley-Davidson said it will close plants and dismiss employees, CNBC said.

The best news of the day so far came from General Electric Co., which reported fourth quarter earnings of $3.65 billion, or 35 cents a share, that were in line with analysts’ expectations. But those profits were off 46 percent, in part because of $1.5 billion in restructuring charges for its lending arm.

GE shares dropped nearly 11 percent to $12.02 Friday.

Earnings were bleak elsewhere in the corporate world because of a 13-month recession in the United States that is spreading worldwide, hitting Asian electronics manufacturers especially hard. Their brands are well known to American consumers.

South Korea’s Samsung Electronics, the biggest maker of flat-screen TVs, reported that it lost $14.4 million in the fourth quarter, its biggest quarterly loss. Sony Corp. already has said it will post its first annual loss in 14 years and LG Electronics Inc. reported a record quarterly loss.

Advanced Micro Devices Inc., the chipmaker, said after the market closed Thursday that it had cut its quarterly loss, but it failed to meet the expectations of analysts. Rival Intel reported similar results last week.

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