MW: U.S. stocks rise as Caterpillar, mining stocks gain ground
By Peter McKay , MarketWatch
NEW YORK (MarketWatch) -- 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 (DJIA 10,451, +16.47, +0.16%) rose 16.47 points, or 0.2%, to 10,450.64, up 2.3% for the week. Caterpillar (CAT 65.70, -0.15, -0.23%) 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. Read more in Currencies.
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 (COMP 2,310, +2.64, +0.11%) and the Standard & Poor's 500 Index (SPX 1,118, +1.47, +0.13%) 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 61.20, -0.05, -0.08%) , up 2.6%; Coeur d'Alene Mines (CDE 16.51, -0.29, -1.73%) , up 7.1%; and Freeport McMoRan Copper & Gold (FCX 65.65, -0.25, -0.38%) , up 0.1%.
The health-care sector was weighed down by a 2.4% drop in Medco Health Solutions (MHS 60.11, +0.06, +0.10%) and a 1.4% decline in Express Scripts (ESRX 51.54, -0.48, -0.92%) after an agreement was struck allowing Walgreen (WAG 30.08, -0.01, -0.03%) to continue participating in CVS Caremark's pharmacy-benefit management network, resolving a spat between the companies. Shares of Walgreen and CVS (CVS 32.43, +0.59, +1.85%) , 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 23.95, -1.10, -4.39%) 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.
