By Christopher Whittall and Amrith Ramkumar
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," he said.
The Dow Jones Industrial Average fell 31.71 points, or 0.1%, 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%, 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 the week higher 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. 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 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 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 flirted with share-price milestones
this week ahead of upcoming earnings. Amazon, also technically a
consumer stock, ended the week up 2.4% and influenced major stock
moves on Thursday after Sears announced it would sell Kenmore
appliances directly on the e-commerce giant's website. The news
dragged down other appliance sellers like Home Depot and
Lowe's.
Earnings reports drove some of the biggest stock moves
Friday.
Shares in eBay fell 57 cents, or 1.5%, to 36.61 on Friday after
the e-commerce company late Thursday reported earnings that were
largely in line with Wall Street 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 rose 11.65, or 9.2%, to 138.43, and Capital One added
6.93, or 8.6%, to 87.94 Friday after earnings beat analysts'
expectations.
Although the companies that have reported so far have increased
earnings more 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 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 prices rise. Utility 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 its highest New
York closing 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 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 18:28 ET (22:28 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.