Stocks Drop, on Track to End Strong Week on Muted Note
By Joe Wallace
U.S. stocks declined Friday, signaling a muted end to a strong
week on Wall Street.
The Dow Jones Industrial Average fell 85 points, or 0.3%. The
blue-chip average was still on course for modest weekly gains.
The S&P 500 slipped 0.1%, backing away from Thursday's
record, and the Nasdaq Composite lost less than 0.1%.
Markets appeared to be pausing after rallying for much of
January, with money managers saying there was no clear catalyst for
the decline. Investors have been cheered in recent days by a solid
start to earnings season, though some are concerned that high
valuations in corners of the market will leave stocks vulnerable in
the coming months.
"With a lack of new ammunition, people are simply stopping off,"
said Lars Skovgaard Andersen, investment strategist at Danske Bank
Investors are cautious of adding new positions ahead of the
Federal Reserve's decision on monetary policy and earnings from
major companies including Facebook, Apple and Tesla next week, he
Shares of International Business Machines fell 10% after the
company said it expected to return to revenue growth this year,
following a 4.6% decline in 2020
Intel dropped 8.5% after the chip maker posted net income for
2020 of $20.9 billion, down from $21.1 billion a year earlier.
Paint maker PPG Industries said sales volumes fell in the fourth
quarter, pushing shares down 2.3%.
Kansas City Southern predicted double-digit revenue growth in
2021, lifting shares in the railroad company by 3.7%.
Earnings have mostly impressed so far this year. Of the 62
companies in the S&P 500 that had reported results by the end
of Thursday, 89% have beaten analysts' expectations, according to
"So far, so good," said Fredrik Öberg, chief investment officer
for private banking at SEB, highlighting results from Netflix,
BlackRock and several banks.
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
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% to $55.56 a
Political uncertainty pressured assets in Italy, where the
benchmark FTSE MIB index dropped 1.6% 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
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.
Among individual European stocks, Siemens rose 7% after the
German engineering company said preliminary quarterly results were
broadly ahead of market expectations. Volkswagen said deliveries
rose in the fourth quarter, boosting shares in the German car maker
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
Akane Otani contributed to this article
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
January 22, 2021 12:46 ET (17:46 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.