Stocks Fall as Investors Parse Latest Batch of Earnings Reports
July 21 2017 - 12:28PM
Dow Jones News
By Christopher Whittall and Amrith Ramkumar
U.S. stock indexes edged lower Friday as investors continued to
closely watch the latest round of corporate earnings.
The Dow Jones Industrial Average fell 61 points, or 0.3%, to
21551. The S&P 500 and the Nasdaq Composite declined 0.2%. Both
indexes were still on track to end the week higher and near
records, though declines Friday would end the Nasdaq's 10-session
winning streak. That's the tech-heavy index's longest such streak
since February 2015.
With U.S. stocks resting near record highs, many analysts say
robust corporate earnings and forecasts are needed to help push
major U.S. indexes even higher.
"We need strong earnings growth to see the rally continue, and
we're not sure we're going to get that," said Jeroen Blokland, a
senior portfolio manager at Dutch asset manager Robeco.
Shares in General Electric declined 3.1%, placing it among the
worst performers in the S&P 500, after the company reported a
smaller-than-expected fall in earnings. Many analysts are skeptical
that the industrial giant can meet its future financial
targets.
Shares in eBay, meanwhile, fell 1.7% after the e-commerce
company late Thursday reported earnings that were largely in line
with Wall Street expectations.
Microsoft shares slipped 0.7% from their all-time high, despite
posting a jump in profits Thursday that beat analyst
projections.
Still, earnings figures so far have generally been solid, said
David Lefkowitz, senior equity strategist at UBS Wealth Management
Americas. Many of the market's biggest names are scheduled to
report next week, including Google-parent Alphabet, Facebook and
Amazon.com.
"The initial read here looks pretty favorable," Mr. Lefkowitz
said. "There are always pockets of strengths and weakness within
earnings season, but overall it's been more strength than
weakness," he said.
Investors have also kept a close eye on central bank meetings in
Europe and Japan this week following recent signals from several
policy makers that the end is nearing for the easy-money policies
that have supported financial markets in recent years.
The euro was up 0.2% recently against the dollar at $1.1653, a
day after leaping 1% when European Central Bank President Mario
Draghi reaffirmed his confidence in the eurozone economy and said
the central bank would discuss the future of its massive
asset-purchase program in the fall. The WSJ Dollar Index, which
tracks the dollar against a basket of 16 currencies, was recently
down 0.2% Friday, on track for its lowest close since October.
Many investors expect global central banks to move slowly when
withdrawing their monetary stimulus because economic growth has
remained tepid in many parts of the developed world.
"We have Goldilocks growth prospects with improving economic
fundamentals, but inflation is missing in action. That allows
central banks to go cautiously in terms of normalizing monetary
policy," said Arnab Das, head of EMEA and emerging-market macro
research at Invesco Fixed Income.
The yield on the 10-year U.S. Treasury note fell to 2.239%,
according to Tradeweb, from 2.266% Thursday. Yields fall as prices
rise. Utility shares, known as bond proxies because they pay
relatively high dividends, were the best-performing S&P 500
sector on Friday and for the week.
European stocks were broadly lower, dragged down by a fall in
auto and construction stocks. The Stoxx Europe 600 was recently
down 1.2%.
Earlier, Japan's Nikkei Stock Average ended 0.2% lower and Hong
Kong's Hang Seng Index fell 0.1%.
Write to Christopher Whittall at
christopher.whittall@wsj.com
(END) Dow Jones Newswires
July 21, 2017 12:13 ET (16:13 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.