By Peter McKay
Stocks edged higher Friday as remarks from Caterpillar Inc.
bolstered investors' confidence in Asia's economy, though lingering
worries about Europe kept the rally in check.
The euro weakened and gold futures closed at a record high for a
second day as some investors continued to look for safe havens.
The Dow Jones Industrial Average (DJI) rose 16.47 points, or
0.2%, to 10,450.64, up 2.3% for the week. Caterpillar (CAT) was
among the measure's top performers on Friday, up 1.4%, after the
industrial giant posted a 38% year-over-year jump in machine sales
in Asia for May.
That encouraged optimism about Asia, and especially China, where
efforts to put the brakes on growth have prompted worries about
demand.
However, the Caterpillar report wasn't as upbeat about Europe.
Some traders were also nervous that Group of 20 leaders scheduled
to meet in Canada next weekend may end up squabbling about whether
China should allow its currency to appreciate versus the euro and
the U.S. dollar.
Officials in the U.S. and Europe have previously accused China
of seeking an unfair trade advantage by undervaluing its currency
to make Chinese exports cheaper in other countries.
The euro traded at $1.2379, down from $1.2385 late Thursday.
Still, the euro posted its strongest weekly gain since September,
solidly above its 10-year moving average after successful euro-zone
debt auctions soothed some investor anxiety.
Traders and analysts said that several events this week,
including a successful offering of Spanish debt, have ratcheted
worries down about Europe's credit crisis compared to a few weeks
ago. But the region's financial health is still something that
participants are keeping a close eye on, with a potential return of
volatility in stocks, currencies and other assets still possible if
there's any hint of renewed trouble.
People are taking a week-by-week view of the markets right now
rather than saying everything is OK and let's move on," said
strategist Peter Boockvar, of Miller Tabak. "Remember, Greece came
to our attention back in November, and there were several stretches
of time along the way where we thought things would be fine."
The most actively traded gold contract, for August delivery,
settled $9.60, or 0.8%, higher at a fresh all-time high of
$1,258.30 an ounce on the Comex division of the New York Mercantile
Exchange. It also hit an intraday record of $1,263.70.
The Nasdaq Composite Index (RIXF) and the Standard & Poor's
500 Index (SPX) edged up 0.1% each. The latter's health-care sector
weighed on the broad index, although the energy and materials
sectors climbed.
Among the mining stocks benefiting from the bounce in gold and
other metals were Newmont Mining (NEM), up 2.6%; Coeur d'Alene
Mines (CDE), up 7.1%; and Freeport McMoRan Copper & Gold (FCX),
up 0.1%.
The health-care sector was weighed down by a 2.4% drop in Medco
Health Solutions (MHS) and a 1.4% decline in Express Scripts (ESRX)
after an agreement was struck allowing Walgreen (WAG) to continue
participating in CVS Caremark's pharmacy-benefit management
network, resolving a spat between the companies. Shares of Walgreen
and CVS (CVS), which are in the consumer staples category, rose on
the agreement. Walgreen climbed 2.8% and CVS rose 1.9%.
Friday was also a "quadruple witching" day, with stock-index
futures, stock-index options, stock options and single-stock
futures expiring, prompting investors and traders to readjust their
positions.
The expirations sometimes prompt increased volume and
volatility. However, the CBOE Market Volatility Index (VIX) fell 5%
to 23.80, while volume was below the 2010 daily average. Composite
activity in New York Stock Exchange-listed companies hit 4.9
billion shares.
While the dollar strengthened against the euro, it was lower
against the yen. Treasury prices edged down, pushing the yield on
the 10-year note up to 3.225%. Crude-oil futures edged rose to just
above $77 a barrel, up 4.6% for the week.