Wall Street breathes again as week closes on quiet note

Wall Street ended a tumultuous week quietly yesterday, with stocks struggling to gain ground despite a consumer confidence report that was not as bad as predicted. However, with an upbeat Goldman Sachs report on technology stocks and a rebound in European markets, investors gained confidence and went stock-picking at bargain prices.

The Dow Jones Industrial Average closed at 8,264.39, a gain of 0.95 per cent, while the tech-led Nasdaq closed at 1,262.12, a rise of 1.78 per cent.

Although most of the profit-taking was in blue-chip stocks, the Dow Jones managed to hold on to most of its gains since Wednesday's record-breaking rally of nearly 500 points before traders left for a much-needed weekend break.

Consumer confidence improved in the first half of July to 86.5 after slumping in June from 92.4 to 88.1, according to the University of Michigan's index of consumer sentiment. The index of attitudes towards future economic activity dropped steeply however to 81 from 87.9 in June.

Wall Street breathed a sigh of relief that it was not worse given the upheaval and turmoil in the markets which has written many billions off the value of shares. Economists polled by Thomson Global Markets had expected the index to rise to 86.8.

"We are starting to get investor interest back into the marketplace," said Mr Arthur Hogan, chief market analyst at Jefferies. But "it is a Friday. Nobody is going to make any big bets."

Goldman Sachs upgraded several companies in the semiconductor equipment sector, forecasting that funds flow and seasonality may drive a meaningful move in the stocks, though "fundamentals are not likely to improve in the near term". Mr Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia, said mutual fund managers "feel more comfortable with their cash flows, that investors aren't going to pull money out, and the valuations make them feel excited about doing some buying."

Europe displayed tentative signs of confidence yesterday, with most managing to close the day on a positive note as conditions remained volatile.

The Irish market followed the trend, dragging itself up 0.95 per cent amid relatively low volumes, but still nursing overall losses of 6 per cent for the week.

One dealer said that there was "a better feel about the whole market" in Dublin, describing the day's performance as a "general, decent pick-up" after an unpredictable week.

"One minute everybody's a seller and the next minute, everybody's a buyer," said another, adding that most sellers yesterday were players who needed to raise cash. Bargain hunting was also in evidence, the trader said.

In London, the FTSE 100 finished a week of jittery trading by nudging above the psychological 4,000 point mark after Thursday's surge. The index closed up 1.3 per cent, staging a recovery from early declines.

The French CAC 40 and the German DAX 30 meanwhile posted slightly less-certain gains, both ending up 0.7 per cent on the back of positive corporate news among domestic industrials.

The Nasdaq composite recovered after dropping when Taiwan Semiconductor Manufacturing, the world's biggest manufacturer of silicon chips for other companies, issued a downbeat outlook for the second half and announced spending cuts.