By Joe Wallace and Akane Otani 

U.S. stocks wobbled Friday but managed to post weekly gains, lifted by shares that rallied on strong quarterly reports.

Investors were encouraged this week by a solid start to the corporate earnings season, with companies from Netflix to Morgan Stanley reporting better-than-expected results.

Although stock momentum appeared to fade Friday, with both the S&P 500 and Dow Jones Industrial Average retreating from records set earlier in the week, analysts said they believe the market has potential to keep climbing as long as earnings continue to show companies are weathering the coronavirus pandemic.

Next week, several technology-driven companies, including Facebook, Apple and Tesla, are set to report results.

"With a lack of new ammunition, people are simply stopping off [Friday], " said Lars Skovgaard Andersen, investment strategist at Danske Bank Wealth Management.

The Dow Jones Industrial Average fell 179.03 points, or 0.6%, to 30996.98 on Friday and rose 0.6% for the week.

The S&P 500 slipped 11.60 points, or 0.3%, to 3841.47 and climbed 1.9% for the week.

The Nasdaq Composite erased initial losses to end up 12.15 points, or 0.1%, to 13543.06. It posted a 4.2% weekly gain.

Shares of International Business Machines fell $13.04, or 9.9%, to $118.61 after the company reported a 4.6% decline in revenue in 2020 but pledged to return to revenue growth this year.

GameStop soared $21.98, or 51%, to a record close of $65.01. Strategists suggest the move was fueled by individual investors attempting to squeeze short sellers out of their positions.

Paint maker PPG Industries fell $5.71, or 4%, to $137.82 after saying its sales volumes fell in the fourth quarter.

Railroad company Kansas City Southern gained $4.59, or 2.2%, to $217.58 after predicting it would deliver double-digit revenue growth in 2021.

Meanwhile, stocks broadly retreated in overseas markets and oil prices dropped amid worries that coronavirus restrictions were crimping demand for crude. Surveys of purchasing managers in Europe showed that high coronavirus rates and government curbs were increasing the risk of the second recession since the pandemic struck.

The pan-European Stoxx Europe 600 index fell 0.6%, led lower by energy companies and travel-and-leisure firms, whose profits are closely tied to the fortunes of the economy.

Brent-crude futures, the benchmark in international energy markets, lost 1.2% to $55.41 a barrel.

Political uncertainty pressured assets in Italy, where the benchmark FTSE MIB index dropped 1.5% after a local newspaper reported that Prime Minister Giuseppe Conte was considering a snap election. Mr. Conte is under pressure to strengthen parliamentary support for his government, a task that appears increasingly difficult, raising the prospect of fresh elections in the spring.

The probability of an election "has likely risen in the past few days, and markets are discounting it," said Francesco Pesole, foreign-exchange strategist at ING Groep.

In Asia, Hong Kong's Hang Seng Index ended 1.6% lower after a local newspaper reported that the city would place tens of thousands of people in lockdown to control Covid-19. China's Shanghai Composite fell 0.4%.

Mr. Andersen said he was closely watching outbreaks of coronavirus in China and Hong Kong, after many Asian economies rebounded quickly from the pandemic last year.

"It is of course a risk that this locomotive in Asia could be hurt by this, but we think they have it under control," he said.

Write to Joe Wallace at Joe.Wallace@wsj.com and Akane Otani at akane.otani@wsj.com

 

(END) Dow Jones Newswires

January 22, 2021 16:43 ET (21:43 GMT)

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