Stocks Fall as Investors Parse Latest Batch of Earnings Reports
July 21 2017 - 4:45PM
Dow Jones News
By Christopher Whittall and Amrith Ramkumar
The S&P 500 edged lower Friday, but notched a gain for the
week as corporate earnings continued to drive some of the biggest
moves.
The Dow Jones Industrial Average fell 32 points, or 0.2%, to
21580. The S&P 500 and the Nasdaq Composite declined less than
0.1%. Friday's declines end the Nasdaq's 10-session winning streak,
the tech-heavy index's longest such streak since February 2015.
Technology shares have notched fresh milestones this week, with
the S&P 500's best-performing sector this year continuing to
attract investors for its ability to increase earnings amid soft
economic growth. On Wednesday, the information technology sector
set a new all-time high for the first time in almost 20 years.
Despite a 0.1% decline Friday, it still sits at levels not seen
since the dot-com boom.
Microsoft shares slipped 0.6% Friday from their all-time high,
despite posting a jump in profits after the market closed Thursday
that beat analyst projections. Earlier in the week, shares of
Netflix, which is classified as a consumer stock in the S&P 500
but often grouped with highflying technology firms, had their best
day of the year after the streaming giant beat its
subscriber-growth estimate. Facebook and Amazon.com have also
flirted with share-price milestones this week ahead of upcoming
earnings.
Earnings figures across sectors so far have generally been
solid, said David Lefkowitz, senior equity strategist at UBS Wealth
Management Americas.
"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.
With U.S. stocks resting near records, many analysts and
investors say robust corporate earnings and forecasts will need to
continue to help push major indexes even higher.
On Friday, shares in General Electric declined 2.9%, 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 1.5% after the e-commerce
company late Thursday reported earnings that were largely in line
with Wall Street expectations.
Capital One and Cintas were among the S&P 500's best
performers after beating earnings expectations. Shares of both
companies gained more than 8%.
Investors also kept a close eye on central bank meetings in
Europe and Japan this week. Many investors expect global central
banks to move slowly when withdrawing their monetary stimulus
because of weak economic growth, providing favorable conditions for
stocks and bonds.
"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 2.232%,
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 declined 1%.
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 16:30 ET (20:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.