NEW YORK (CNN/Money) -
U.S. stocks recovered from steeper losses by the close Friday, but were unable to make much headway on the session or the week as the major indexes sputtered near recent multi-year highs, even after the release of mostly upbeat earnings.
The Dow Jones industrial average (down 54.89 to 10568.29, Charts) lost nearly 1 percent, the S&P 500 index (down 2.39 to 1141.55, Charts) lost 0.2 percent and the Nasdaq composite (up 4.86 to 2123.87, Charts) gained 0.2 percent.
For the week, the Dow lost 0.3 percent, the Nasdaq lost 0.8 percent, while the S&P 500 gained 0.1 percent.
The Dow and the S&P 500 gained for eight consecutive weeks, while the Nasdaq gained in seven of the last eight weeks.
"Stocks have had a good run over the last couple of months on anticipation that the fourth-quarter earnings would be good, and by and large, they have been," said Sarat Sethi, a portfolio manager at Douglas C. Lane & Associates. "But we've had so many weeks of an up market that it was bound to stabilize at some point, which is what we're seeing now."
Earlier in the week, the Dow and S&P 500 closed at 22-month highs and the Nasdaq closed at a 30-month high. After hitting those levels, the indexes have largely drifted, despite a slew of mostly upbeat earnings.
Next week brings a continued slew of quarterly earnings news and a variety of economic information, including the latest Federal Reserve interest-rate setting meeting Tuesday and Wednesday, in which the central bank is likely to hold rates steady at a 40-year low.
Monday's sole economic report is existing home sales, forecast to have risen modestly to an annual rate of 6.10 million units in December from a 6.06 million unit annual rate last month.
Monday brings earnings from Dial Corp (DL: Research, Estimates) and Schering-Plough (SGP: Research, Estimates) before the bell, American Express (AXP: Research, Estimates) during trading hours and Altera (ALTR: Research, Estimates), McDonald's (MCD: Research, Estimates) and Texas Instruments (TXN: Research, Estimates) after the close. For a more in-depth look at the week's major earnings, click here.
"I think we're going to continue to see this churning for the rest of the month and then February tends to be seasonally weaker for the market," said John Hughes, a market analyst at Shields & Co. "Longer-term, the momentum is still up, but we may need a few weeks of consolidation."
Friday's market
One bright spot during Friday's session was Microsoft, which saw its shares bid up despite reporting something of a mixed quarter. However, MSFT's gains were insufficient to spare the Dow from declines, with a variety of components tumbling.
Late Thursday, Microsoft (MSFT: up $0.47 to $28.48, Research, Estimates) reported mixed quarterly results. The company earned 34 cents per share after charges in its fiscal second-quarter, more than analysts were expecting and up from a year ago. However, the company also said that unearned revenue, which measures sales from software license renewals the company expects to book in upcoming quarters, declined from the fiscal first-quarter.
The news had sent the stock lower in after-hours trade Thursday, but it recovered Friday with investors and analysts focusing on the implications of a continued business spending recovery. First Albany and Wells Fargo both reiterated their "buy" rating on the stock, and other brokerages issued fairly bullish notes.
However, the stock was one of few Dow issues to close higher on the session, with 22 out of 30 closing lower.
Component AT&T (T: down $0.70 to $19.70, Research, Estimates) lost 3.4 percent after Lehman Bros. downgraded it to "equal weight" from "over weight." The stock had shed 4 percent on Thursday after the company reported a mixed quarter.
Eastman Kodak (EK: down $1.07 to $29.88, Research, Estimates) fell 3.4 percent following Thursday's 10 percent runup. The stock benefited Thursday from an upbeat earnings report and 2004 guidance, as well as plans for cutbacks as the company tries to revamp its traditional film business. However, the company received some mixed notices from brokerages Friday as analysts pointed out that Kodak still has a long way to go in turning things around.
Mixed indications from the chip sector kept the Nasdaq jittery, but close to the breakeven line.
Lattice Semiconductor (LSCC: down $0.63 to $11.73, Research, Estimates) said late Thursday it may have overstated income and was reviewing its accounting to determine if it would have to restate past results. Shares fell 5.1 percent.
Tower Semiconductor (TSEM: down $0.90 to $6.99, Research, Estimates) warned its fourth-quarter loss would be wider than expected. Shares fell 11.4 percent.
However, Vitesse Semiconductor (VTSS: up $0.96 to $8.78, Research, Estimates) rose 12.3 percent in very active Nasdaq trade after the chipmaker reported breakeven results in its most recent quarter, when it was expected to remain in the red until next quarter. The company also raised its forecast for sales and earnings in the current quarter.
In the financial sector, two regional banks announced a merger. Regions Financial (RF: up $2.00 to $39.75, Research, Estimates) will buy Union Planters (UPC: up $1.31 to $32.67, Research, Estimates) in an all-stock deal worth about $6 billion.
Despite the mixed session, market breadth was positive. On the New York Stock Exchange, winners edged losers as 1.53 billion shares traded. On the Nasdaq, advancers beat decliners 9 to 7 as 2.2 billion shares changed hands.
Treasury bond prices fell sharply. The 10-year note lost 1 point in price, pushing its yield up to 4.07 percent. Bond prices had been flat in the morning but fell sharply after Reuters reported that Euro zone representatives en route to the G7 meeting would be open to cutting interest rates. However, the dollar gained versus the euro and yen on the news.
NYMEX light sweet crude oil futures added a penny to settle at $34.94 a barrel. COMEX gold fell $2.10 to settle at $408 an ounce.
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