Login ID:
Password:
Partner Login
Contact Us : 7066511911

Earnings Boost S&P 500 for the Week -- WSJ

22 Jul 2017 6:32 am

Solid reports keep stock indexes close to records, but Nasdaq ends 10-day win streak
By Amrith Ramkumar and Christopher Whittall 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 22, 2017).

The S&P 500 inched lower Friday but held on to a weekly gain as signs of health in corporate profits boosted shares.

With major indexes holding near records, some investors and analysts said continued gains will depend on robust earnings. Reports 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."

The Dow Jones Industrial Average fell 31.71 points, or 0.1%, on Friday to 21580.07, finishing the week down 0.3% and snapping a two-week streak of gains.

The S&P 500 declined 0.91 point, or less than 0.1%, on Friday to 2472.54, and the Nasdaq Composite declined 2.25 points, or less than 0.1%, to 6387.75.

Both the S&P 500 and Nasdaq ended higher for the week -- up 0.5% and 1.2%, respectively -- and near records, though Friday's declines ended the Nasdaq's 10-session winning streak. It was the tech-heavy index's longest such streak since February 2015.

Losses in energy shares weighed on the S&P 500 Friday, as U.S. crude for August delivery fell 2.5% to $45.77 a barrel amid concerns that oil exporters won't stick to output cuts. Oil dropped 2.1% for the week.

Energy stocks in the S&P 500 fell 0.9% Friday and are down roughly 14% in 2017.

Technology stocks in the S&P 500 slipped less than 0.1% Friday, concluding a week in which the index's tech sector reached a new high for the first time in almost 20 years.

Tech shares have gained 23% this year, making the sector the best-performer in the S&P 500.

Some analysts said tech stocks remain attractive because of the ability of those companies to increase earnings even in times of tepid economic growth.

Microsoft shares slipped 43 cents, or 0.6%, to $73.79 Friday, despite posting a jump in profit after the market closed Thursday that beat analysts' 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 flirted with share-price milestones this past week ahead of coming earnings reports. Amazon, also technically a consumer stock, ended with a rise of 2.4% for the week and influenced major stock moves on Thursday after Sears Holdings announced it would sell Kenmore appliances directly on the e-commerce giant's website. The news dragged down other appliance sellers, such as Home Depot and Lowe's, on Thursday.

Earnings reports drove some of the biggest stock moves in Friday's trading.

The shares of eBay dropped 57 cents, or 1.5%, to 36.61 Friday after the e-commerce company late Thursday reported earnings that were largely in line with Wall Street's expectations.

Shares of Dow component General Electric declined 78 cents, or 2.9%, to 25.91 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.

Cintas gained 11.65, or 9.2%, to 138.43 and Capital One added 6.93, or 8.6%, to 87.94 Friday after both companies' earnings beat analysts' expectations.

Although the companies that have reported their quarterly results so far have had larger increases than Wall Street anticipated, some investors caution that future projections might be getting too optimistic.

"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.

Investors also kept a close eye on central-bank meetings in Europe and Japan this past week. Many expect global central banks to move slowly when withdrawing their monetary stimulus because of weak economic growth, providing favorable conditions for stocks and bonds.

The yield on the 10-year U.S. Treasury note fell to 2.232%, from 2.266% Thursday, posting its largest two-week decline since March. Yields fall as bond prices rise.

Utilities shares, known as bond proxies because they pay relatively high dividends, were the best-performing S&P 500 sector on Friday, rising 0.8% to post a weekly gain of 2.6%.

The euro rose 0.3% against the dollar Friday to $1.1666, for its highest late New York level since January 2015, a day after leaping 1% when European Central Bank President Mario Draghi reaffirmed his confidence in the eurozone economy.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, ended down 0.3% Friday, recording its lowest close since September.

"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.

Elsewhere, 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 on Friday and Hong Kong's Hang Seng Index fell 0.1%.

Write to Christopher Whittall at christopher.whittall@wsj.co
 

(END) Dow Jones Newswires

July 22, 2017 02:32 ET (06:32 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
Disclaimer
Top 5 Special Reports
USD/INR (Dec 20) Bearish Price Trend / May Retest Se...
Weekly: Most Pulses Extend Weakness, Barring White Pea
Weekly: ICE Cotton Manages Positive Closing Amid Robust...
Weekly: NY Sugar Slips in Red amid Higher Global Supply...
USD/CNY & USD/IDR