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Stocks ended mixed after an otherwise strong month for the market as a decline in energy prices and a better-than-expected third-quarter earnings season offered investors their best October in three years. There have been continued worries about the health of the economy to dampen investor sentiment.

Today, the Dow Jones industrial average closed down 5.77 or 0.05% to 12,080.73, the broader S&P 500 index closed up 0.01 to 1,377.94, and the tech-fueled Nasdaq closed up 2.94 or 0.12% to 2,366.71. On the month, the Dow gained 3.4%, the S&P 500 climbed 3.2%, and the Nasdaq rose 4.8%.

Market breadth was mixed. On the New York Stock Exchange, winners barely edged out losers on volume of 1.75 billion shares. On the Nasdaq, decliners beat advancers by a margin of 15 to 14 on volume of 1.95 billion shares.

U.S. employment costs rose a slightly bigger-than-expected 1% in the third quarter, the largest increase in more than two years, as wages, salaries and benefits advanced during the quarter. The increase in the Employment Cost Index, edged up from the second quarter’s 0.9% and was larger than the 0.9% rise economists had forecast. This provided little comfort for those investors worried about inflation and consumer sentiment heading into the important holiday shopping season. U.S. consumer confidence dipped in October on growing pessimism about the job market and the economy. consumer confidence index fell to 105.4 in October from 105.9 in September. Business activity grew at a slower pace in October. The Chicago PMI fell to 54.1% from 62.1% in September. Economists were expecting the index to fall to 58.7%. The PPI fell to 62.5% from 69.8%, the lowest since June 2005.

Shares of Pfizer closed down 55 cents, or 2%, to $26.55, following the release of mixed preliminary clinical data for a proposed follow-on product to its blockbuster cholesterol drug Lipitor. Phase III data for torcetrapib/atorvastatin shows that patients using the drug combination experienced slightly higher systolic blood pressure than those who took Lipitor alone. On the upside, data also showed the combination significantly raised HDL while lowering LDL when compared to Lipitor alone. Lipitor is the world’s best-selling branded prescription drug, with 2005 sales of $12.9 billion.

Stock of Procter & Gamble closed down $0.43 or 1% to $63.39, despite posting higher quarterly earnings and boosting its full-year earnings outlook. Its first-quarter income rose 33%, helped by strong sales and volume gains from Gillette Fusion razors and new products such as Crest Pro Health toothpaste. Profit rose to $2.7 billion, from $2.03 billion a year ago. Sales for the quarter rose 27% to $18.79 billion from $14.79 billion, while unit volume expanded 23%.

Shares of MetLife Inc. closed down 3.1% at $57.13 on concern about weak sales growth. While the company reported a 34% increase in third-quarter net income, the profit at auto and home insurance unit offset a stagnate performance from its institutional retirement and savings business. Third-quarter net income came in at $1.03 billion, up 34% from a year earlier.

Shares in Eastman Kodak climbed 2.7% or 11% to $24.40 as the company reported a narrower third-quarter loss, with increased profit from digital imaging outpacing a decline from traditional film sales. Its loss shrank to $37 million, from $914 million in the year-earlier period. However, sales fell 10% to $3.2 billion, under the $3.29 billion expected by analysts. Profit from its digital products surged to $105 million from $7 million in the year-earlier quarter thanks to results in its graphic-communications and consumer portfolio.

Shares in Martha Stewart Living Omnimedia climbed 5.1% to $21.20 after the company reported a narrower third-quarter loss as print and broadcast advertising sales picked up considerably to help power a 48% boost in revenue. The company lost $25.2 million, compared with last year’s loss of $26.1 million.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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