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Stocks ended mixed and little changed on Friday. However, they capped a week of gains in which the Dow Jones Industrial Average crossed the 13,000 mark for the first time, as news of a sharp slowdown in economic growth in the first quarter offset optimism about earnings, including Microsoft Corp.’s latest results. Strength in the Dow masked otherwise weak market action which was blunted by the unfavorable economic data.

Today, the Dow Jones industrial average closed up 15.44 or 0.12% to 13,120.94, with the blue-chip barometer duplicating last week’s record run-up by closing at a record high for the third straight day. The broader S&P 500 closed down 0.18 or 0.01% to 1,494.07, the tech- laden Nasdaq composite closed up 2.75 or 0.11% to 2,557.21 closed slightly higher, reaching its highest level in over 6 years. For the week, the Dow closed up 1.2%, the S&P gained 0.7% and the Nasdaq rose 1.2%.

Market breadth was negative. On the New York Stock Exchange, losers edged out winners 18 to 13 on volume of 1.5 billion shares. On the Nasdaq, decliners topped advancers by 18 to 11 on volume of 2.1 billion shares.

After reaching new highs, the stock gauges struggled for direction as investors sorted through the GDP report’s many components and welcomed another batch of strong earnings. With 61% of the S&P 500 having reported, first-quarter earnings are currently on track to have risen 6.8% from a year earlier. However, the GDP grew at a slower-than-expected 1.3% annual rate in the first quarter, down from the 2.5% in the fourth quarter. Economists had forecast GDP would slow to growth of 1.8% in the quarter. But the slow growth, paired with higher-than-expected inflation components, failed to spook investors.

Shares of Microsoft closed up $0.99 or 4% to $30.09, after reporting a 65% rise in quarterly profit that topped all estimates. The company also forecast 2008 profit at the midpoint of a range of analyst estimates. It posted a net profit of $4.93 billion, versus a profit of $2.98 billion in the year-ago period. Revenue rose 32% to $14.4 billion.

Stock of General Electric closed up $0.98 to $36.82, after a Citigroup analyst said the conglomerate should spin off NBC and several other units to give more focus to the company. GE has diverse operations ranging from manufacturing jet engines to commercial lending to NBC media. The spinning off ill-fitting businesses would have 2008 earnings of about $16.5 billion.

U.S. light crude oil for June delivery settled up $1.34 to $66.40 a barrel on the New York Mercantile Exchange.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter
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