U.S. Stocks End Higher

By Dow Jones Business News, 

By Matt Jarzemsky

U.S. stocks edged higher Friday, but capped their first weekly decline in four weeks, as escalating tensions in Iraq added to investor concerns about valuations and sluggish economic growth.

The Dow Jones Industrial Average rose 41.55 points, or 0.2%, to 16775.74.

The S&P 500 added 6.05 points, or 0.3%, to 1936.16. The Nasdaq Composite Index advanced 13.02 points, or 0.3%, to 4310.65.

For the week, the Dow pulled back 0.9%, retreating from a record closing high it notched Tuesday. The blue-chip benchmark is up 1.2% so far in 2014, while the S&P 500 is up 4.8% in that period.

Traders said the Iraqi conflict added to lingering concerns that have kept investors on edge as stock indexes have marched to record levels this year. Economic growth has been sluggish--a notion reinforced by a disappointing retail sales report Thursday and an unexpected drop in a measure of consumer confidence Friday.

Meanwhile, some say corporate profits haven't grown fast enough to justify stocks' gains in the past year and a half.

"The market started to get a little skittish, a little tentative and all it needed was a catalyst and I think it got it, in the form of Iraq," said Keith Bliss, senior vice president at New York brokerage Cuttone & Co.

Conflict in the country escalated in recent days as Islamist insurgents seized several major cities and closed in on Baghdad, the capital. President Barack Obama said Friday he would consider a range of military options, but emphasized he isn't considering the deployment of U.S. ground troops.

Energy shares in the S&P 500 posted the strongest gains among the index's 10 sectors Friday as the Middle East tensions fueled the biggest weekly rise in oil prices so far this year.

Internet stocks rallied Friday, led by OpenTable, which surged 48%, after Priceline Group agreed to buy the restaurant booking service for $2.6 billion in cash. Peer Yelp jumped 14% while GrubHub gained 7%.

On the economic front, the producer-price index for May declined 0.2% on the month, missing forecasts for a 0.2% rise. Excluding volatile food and energy components, core PPI was flat, versus expectations of a 0.1% increase.

The preliminary Thomson-Reuters/University of Michigan consumer sentiment index for June fell to 81.2, bucking economists' forecast for an increase to 83.0 from May's final reading of 81.9.

"We do see recovery, we do see credit growth and job growth, which is the important thing. But the question is, is it enough?" said Wayne Lin, who oversees about $10.6 billion as a portfolio manager at Legg Mason's global asset- allocation group.

Mr. Lin has maintained a bullish stance on U.S. stocks, even as he sees valuations as "fair and starting to look a bit rich," because he sees other assets like bonds as even more overvalued.

Bonds fell in price after Bank of England Gov. Mark Carney said late Thursday that interest rates in the U.K. could rise sooner than investors expect. The remarks put some investors in U.S. government debt on edge ahead of a meeting of the U.S. central bank's policy-setting committee next week.

The yield on the 10-year Treasury note, which moves inversely to its price, ticked up to 2.601% from 2.586% late Thursday.

Fears of further violence in Iraq have pushed oil prices higher. Crude-oil futures climbed 0.4% to $106.91 a barrel, after surging 2% on Thursday, the biggest one-day percentage gain in over two months.

Gold futures inched up less than 0.1% to $1,273.70 an ounce.

European markets fell as worries about Iraq and possible rate increases in the U.K. weighed on sentiment. The Stoxx Europe 600 shed 0.2%.

Asian markets showed some strength, with China's Shanghai Composite rising 0.9% after data showing bank lending surged in May. Japan's Nikkei Stock Average climbed 0.8%.

In the corporate arena, Express Inc. surged 21% after private-equity firm Sycamore Partners reported a 9.9% stake in the retailer and said it was interested in looking into a possible buyout.

Intel Corp. advanced 6.8% after boosting its financial estimates on stronger-than-expected personal-computer demand.

Citigroup dropped 1.4% after reports the Justice Department has warned the bank it's seeking a figure close to $10 billion to settle investigations into how Citi handled securitized mortgages.

Write to Tomi Kilgore at tomi.kilgore@wsj.com

  (END) Dow Jones Newswires
  Copyright (c) 2014 Dow Jones & Company, Inc.

This article appears in: News Headlines

Referenced Stocks: LM

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