Stocks initially fell sharply Friday following a government report that August retail sales excluding automobiles declined precipitously. The report suggested consumers held off spending in the face of turmoil in the financial markets, an unwelcome development that some on Wall Street are hoping could be reversed by a rate cut. Some investors regarded the readings as supporting the case for a rate cut when Fed policy makers meet Tuesday.
Friday's session began with unease over the Bank of England's decision to grant emergency funding to lender Northern Rock PLC, which was facing a possible liquidity crisis. The need for the bailout unearthed fresh concerns about the fallout from tightness in the credit markets.
Investors eventually set aside some of their concerns and the Dow Jones industrial average finished up 17.64, or 0.13%, at 13,442.52 after being down as much as 100 points early in the session. The advance gave the blue chip index a gain of 2.5% for the week -- the Dow's biggest weekly point gain since April.
Broader stock indicators likewise showed modest gains Friday but managed their biggest weekly gains since mid-August. The Standard & Poor's 500 index rose 0.30, or 0.02%, to 1,484.25, and the Nasdaq composite index edged up 1.12, or 0.04%, to 2,602.18. For the week, the S&P rose 2.2 percent, while the Nasdaq added 1.4%.
Government bond prices finished almost unchanged Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.46% from 4.49% late Thursday.
Investors have been on edge over whether tightness in the credit market, a housing slump and volatility on Wall Street have dented consumer spending, which accounts for more than two-thirds of economic activity. In another report that perhaps stirred unease about the economy, industrial production in August edged up by just 0.2%, the weakest advance in three months. The figure reflects a 0.3% decline in output from U.S. factories.
Wall Street seemed to wrestle with how the readings might affect the Fed's stance on interest rates. The central bank has left the benchmark fed funds rate unchanged at 5.25% for more than year after a string of increases and hasn't cut rates since 2003. Many on Wall Street expect a cut and are debating whether it will be a quarter percentage point or a half percentage point.
While a cut would make some borrowing less expensive, not all costs would necessarily come down. Some adjustable rate mortgages, a chunk of which are due to reset from low initial rates this fall, are tied to benchmarks other than the fed funds rate, such as the London Interbank Offered Rate, which last week hit multiyear highs.
Oil climbed to an intraday record for a third straight day, rising as high as $ 80.36 before closing at $ 79.10 a barrel in New York. Prices are up 3.1% this week and 25% from a year ago.
Indian ADRs end weak; VSNL, Patni down more than 2%
Indian ADRs ended the week on a negative note and majority of them ended in the red. Only the banks-HDFC and ICICI bucked the trend rising more than 1% each. In the technology segment, Infosys Technologies was down 0.88% at 47.21, Satyam Computers was down 1.48% at 23.93, Patni Computers was down 2.07% at 22.20 and Wipro was down 1% at 13.66.
In the non-tech pack, ICICI Bank was up 1.75% at 44.68, HDFC Bank was up 1.39% at 91.15, MTNL was down 1.80% at 7.10, VSNL was down 2.58% at 19.64, Dr Reddy's Lab was down 0.86% at 16.12, Tata Motors was down 1.05% at 17.02 and Sterlite ended the day 0.37% higher at 16.15.
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