Blue Chips Dip, Nasdaq Up; Data Conflict

Fri Jul 30, 2004
By Megan Davies

NEW YORK (Reuters) - U.S. blue chips declined slightly while tech stocks edged up on Friday as conflicting economic reports cast doubt on the economy's strength, while another hike in oil prices kept investors cautious.

Strong earnings from Gilead Sciences Inc. helped push up the Nasdaq, after the biotechnology company reported a higher quarterly net profit on increased sales of its flagship HIV drug.

Investors focused on the health of the economy, after a report on the U.S. gross domestic product showed economic growth slowed more than expected in the second quarter as consumers curbed their spending.

But the pace of expansion in business activity in the U.S. Midwest increased more than expected in July, helping to confirm an optimistic economic outlook from the Federal Reserve, a report from the National Association of Purchasing Management-Chicago showed.

"It's been kind of a mixed picture between the GDP number, which is slower than people really expected, and the Chicago PMI, which showed a decent rebound," said Rick Meckler, president of LibertyView Capital Management.

Also weighing on the market was news that suspected suicide bombers struck the U.S. and Israeli embassies in Uzbekistan as well as the state prosecutor's office on Friday, killing two local guards at the Israeli mission and wounding nine other people.

Meanwhile, NYMEX crude oil futures rose to new highs on Friday amid fears of supply disruptions as OPEC is pumping at close to full capacity. NYMEX September crude shot up 79 cents to $43.54 a barrel at 1:52 p.m., after earlier trading as high as $43.60 a barrel, a new record in the NYMEX contract's 21-year history.

Higher oil prices are generally bad news for stocks as they push costs up for companies -- causing concerns among investors about the impact on profits.

The Dow Jones industrial average was down 32 points, or 0.32 percent, at 10,097. The Standard & Poor's 500 Index was down 2 points, or 0.19 percent, at 1,098. The technology-laced Nasdaq Composite Index was up 6 points, or 0.32 percent, at 1,887.

After six weeks of declines, the Standard & Poor's 500 index is on track to post a gain for the week. For the month, however, the S&P 500 and the Nasdaq are poised to post their biggest monthly drops since December 2002. The Dow is set to post its biggest monthly loss since January 2003.

Among the slew of economic reports out this morning was one from the National Association of Purchasing Management-New York that showed New York's economy improved for the 11th straight month in July.

The University of Michigan's final reading of its July index of consumer sentiment showed a gain for the month.
Gilead shares jumped after it reported a higher quarterly net profit on increased sales of its flagship HIV drug.

Gilead rose $6.32, or 11 percent, to $65.81.

ChevronTexaco Corp., the No. 2 U.S. oil company, rose after it said quarterly earnings more than doubled on higher energy prices and some one-time gains, though asset sales cut into oil and gas production. It was up 30 cents at $95.78.

Rival Exxon Mobil was up 12 cents at $46.15.



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