Stocks Finish Mixed Amid Profit Jitters

Stocks were mixed Friday, with both the Dow and the technology-driven Nasdaq marking their first down week in more than a month as investors showed caution before the thick of earnings reporting season.

The euro fell against the dollar, setting off a chain reaction that drove down prices of bonds and gold.

With a storm of earnings reports looming next week, stock investors made the blue-chip Dow Jones industrial average and Nasdaq the opposite ends of a see-saw each of the four days of a week shortened by Monday’s Martin Luther King Day holiday.

Both market gauges ended the week down. The Dow slipped 0.3%, breaking eight straight weeks of gains. Nasdaq fell 0.8%, breaking a six-week streak. But the broader Standard & Poor’s 500 edged 0.2% higher for its ninth straight up week.

In Friday’s heavy trading, the Dow fell 54.89 points, or 0.5%, to 10,568.29 and the S&P; eased 2.39 points, or 0.2%, to 1,141.55.

The Nasdaq composite index rose 4.86 points, or 0.2%, to 2,123.87.

Winners beat losers by 7 to 6 on the New York Stock Exchange, and by 9 to 7 on Nasdaq.

“People are primarily taking profits today,” said Cary Nordan, equity analyst at BB&T; Asset Management in Raleigh, N.C.

“Overall, the tone has been positive, but investors are looking ahead to the next six to 12 months and concerned there’s going to be a deceleration in earnings growth relative to last year,” he said.

Technology stocks pared gains from the morning, although shares of industry bellwether Microsoft rallied a day after it lifted its revenue forecast.

Monday will kick off one of the busiest weeks in corporate America’s quarterly reporting period. Though earnings reported so far have generally been strong, analysts say many companies have not delivered bullish enough forecasts to fully justify the steep rise in stock prices over the last year.

“The good earnings reports don’t really create a stampede of buyers,” said Paul Cherney, chief market analyst at Standard & Poor’s Marketscope. “The market expected to see good earnings, and here they are. So now what do we do? What’s next to lift prices?”

Microsoft shares topped Nasdaq’s most actively traded list, rising 47 cents, or 1.7%, to $28.48, and were among the Dow’s top percentage gainers.

The software giant Thursday reported a 17% drop in quarterly earnings because of a change in its stock compensation plan, but it raised its revenue outlook, predicting stronger personal computer demand.

Morgan Stanley shares fell after the investment bank cut its previously reported earnings because of a $27-million after-tax charge after a Paris court awarded damages in connection with its research on French luxury goods group LVMH.

Morgan Stanley said it would take the charge in its fiscal 2003 fourth quarter, lowering its previously reported results by 2 cents a share. Its shares fell 57 cents to $59.29.

In a deal that will create one of the largest banks based in the Southeast, Regions Financial and Union Planters agreed to merge in a $5.9-billion deal. Shares of Regions jumped $2 to $39.75, while Union Planters’ gained $1.31 to $32.67.

In foreign-exchange markets, the euro fell against the dollar after Reuters quoted a diplomatic source saying further strength in the euro could cause the European Central Bank to cut interest rates. The euro fell to a session low in New York of $1.257 from Thursday’s close of $1.271, but recovered to close at $1.259.

The dollar rose to 106.50 yen, recovering from a near-three-year low of 105.76 yen, and above Thursday’s close of 106.08.

Treasury bond prices slid on fears that a rebounding dollar could make central banks less likely to intervene in currency markets. The Bank of Japan, in buying dollars, has been investing in Treasuries, helping to push yields on those securities lower in recent months.

As the price of the benchmark 10-year Treasury note fell, its yield, which moves opposite of its price, jumped to 4.07% from 3.95% on Thursday.

Gold for February delivery fell $2.10 to $407.90 an ounce in New York trading.

March crude oil ended practically unchanged in New York, settling at $34.94 a barrel, up 1 cent.

Market Roundup, C4-5