U.S. stocks fall Friday, booking weekly losses, but S&P 500 index up for 6 straight months
By Christine Idzelis and Mark DeCambre
S&P 500 index up for 6 straight months in longest winning streak since 2018 and only 0.6% off its record high
U.S. stock indexes closed lower Friday, posting a weekly loss to close out the month, with renewed concerns about a rise of cases of the delta variant COVID-19 and disappointing results from Amazon.com partly blamed for the slump.
But the benchmark S&P 500 index has posted gains for six straight months, its longest winning streak since 2018, and is only 0.6% off its record high set last Monday, according to Dow Jones Market Data.
What are major indexes doing?
On Thursday (https://www.marketwatch.com/story/u-s-stock-futures-edge-higher-ahead-f-gdp-report-robinhood-debut-11627553003?mod=market-snapshot), the Dow rose 153.60 points, or 0.4%, to close at 35,084.53, The S&P 500 finished at 4,419.15, up 18.51 points, or 0.4% and the Nasdaq Composite advanced 15.68 points, or 0.1%, to end at 14,778.26.
Stocks finished higher on Thursday after data that showed gross domestic product growing at an annualized pace of 6.5% in the second quarter. (https://www.marketwatch.com/story/the-u-s-grew-6-5-in-the-spring-gdp-shows-as-the-economy-rallied-from-covid-11627562450?mod=article_inline) Investors also shook off a lukewarm debut for shares of commission-free trading app Robinhood Markets .
For the week, the Dow and S&P 500 each declined 0.4 % while the Nasdaq slid 1.1%. All three indexes were up for July, with Dow showing a 1.3% monthly gain, the S&P 500 rising 2.3% and the Nasdaq up 1.2% for the month, FactSet data show.
What's driving the market?
U.S. stocks fell in the final day and week of trading in July, weighed down by worries over Covid-19 and a slide in Amazon.com shares after the technology giant's miss on sales expectations (https://www.marketwatch.com/story/amazon-stock-falls-5-as-covid-19-sales-boom-appears-to-stall-11627589722).
The pullback took shape after stock-market selling in Asia capped a withering week. Hong Kong's Hang Seng marked its worst weekly decline since February and its steepest monthly drop since October of 2018, FactSet data show.
Some analysts pointed to fresh worries about the delta variant as an internal document from the Centers for Disease Control and Prevention (https://www.marketwatch.com/story/as-transmissible-as-chickenpox-heres-the-cdc-report-on-the-delta-variant-that-led-to-new-mask-policy-11627631064?mod=mw_latestnews) indicated increasing official concern over the spread of the variant. First reported by The Washington Post, the data said the variant may be as easily spread from vaccinated and unvaccinated individuals and was as "transmissible as chickenpox."
Also former Food and Drug Administration commissioner Scott Gottlieb told CNBC on Friday, that he believes that new coronavirus infections could be accelerating.
"I wouldn't be surprised if, on the whole, we're infecting up to a million people a day right now, and we're just picking up maybe a 10th of that or less than a 10th of that," he told CNBC's Squawk Box (https://www.cnbc.com/2021/07/30/dr-scott-gottlieb-estimates-up-to-1-million-americans-infected-with-covid-daily-as-delta-spreads.html?&qsearchterm=Gottlieb).
"U.S. stocks were dragged down by a big miss from Amazon and cautious comments from former FDA chief Scott Gottleib that he wouldn't be surprised if, on the whole, we're infecting up to a million people a day right now," wrote Edward Moya, senior market analyst at Oanda, in a research note.
Technology stocks contributed to the drop in U.S. stocks, with Amazon.com (AMZN) shares closing 7.6% lower after second-quarter results (https://www.marketwatch.com/story/amazon-stock-falls-5-as-covid-19-sales-boom-appears-to-stall-11627589722?mod=mw_quote_news) showed a miss on sales and a forecast for the third quarter, suggesting a slowdown in e-commerce activity is set to continue.
On the tech front, "there's little forgiveness, especially when you are sitting at all-time highs," said Shawn Cruz, TD Ameritrade senior market strategist, in a phone interview Friday.
More than half of companies in the S&P 500 index have now reported second-quarter earnings, Cruz said, with investors digesting that data along with the guidance and commentary from management as they wrapped up a final day of trading for the month. Some might begin to reposition their portfolios, he suggested, as the market now has had a "pretty good look" at the results, which so far have been strong.
A heavy week of corporate earnings reports comes as data showed that inflation in the U.S. rose sharply again in June, as gauged by the so-called PCE price index, the Federal Reserve's preferred measure of pricing pressures (https://www.marketwatch.com/story/inflation-surges-again-in-june-pce-shows-as-shortages-plague-the-u-s-economy-11627648930), which rose a sharp 0.5% for the month and 4% for the year.
The increase over the past year remained at a 13-year high, raising the cost of living for consumers and casting a shadow over a strong economic recovery from COVID-19. The surge in prices is largely tied to the reopening of businesses and widespread shortages of supplies and labor spawned by the pandemic.
Meanwhile, consumer spending rose a sturdy 1% in June, the government said Friday (https://www.bea.gov/data/consumer-spending/main). On Thursday, the government said consumer outlays surged almost 12% in June on an annualized basis, underpinning a strong economic recovery.
Separately, St Louis Federal Reserve President James Bullard said (https://www.marketwatch.com/story/feds-bullard-says-he-wants-to-start-slowing-down-bond-purchases-in-the-fall-finish-by-march-11627653153?mod=mw_latestnews)that he thinks financial markets "are very much ready for a taper," noting that he would prefer to begin the process of scaling back on Fed's $120 billion a month in Treasurys and mortgage-backed securities this fall and finish by the end of the first quarter of 2022. His comments come after the Fed on Wedne (https://www.marketwatch.com/story/fed-says-economy-has-made-progress-toward-standards-for-tapering-but-not-enough-to-start-yet-11627495469?mod=mw_latestnews)s (https://www.marketwatch.com/story/fed-says-economy-has-made-progress-toward-standards-for-tapering-but-not-enough-to-start-yet-11627495469?mod=mw_latestnews)day (https://www.marketwatch.com/story/fed-says-economy-has-made-progress-toward-standards-for-tapering-but-not-enough-to-start-yet-11627495469?mod=mw_latestnews) held interest rates steady at a range between 0% and 0.25% and emphasized the central bank's view that rising prices are almost entirely the result of the reopening of the U.S. economy.
Friday's economic reports follow a reading on Thursday that showed U.S. gross domestic product grew at an annualized pace of 6.5% in the second quarter, (https://www.marketwatch.com/story/the-u-s-grew-6-5-in-the-spring-gdp-shows-as-the-economy-rallied-from-covid-11627562450?mod=article_inline) falling short of the average forecast of 9.1% produced by a survey of economists by The Wall Street Journal. Separately, data from the Labor Department showed first-time applications for unemployment benefits fell (https://www.marketwatch.com/story/jobless-claims-fall-after-hitting-two-month-high-11627562987?mod=mw_latestnews&mod=article_inline) 24,000 last week to 400,000.
A final reading of the University of Michigan's consumer-sentiment index fell to 81.2 in July (https://www.marketwatch.com/story/u-s-consumer-sentiment-falls-in-july-as-inflation-expectations-hit-13-year-high-11627655744) from a reading of 85.5 in June, though it exceeded the initial July figure of 80.8. Economists had expected a reading of 80.5, according to a Wall Street Journal survey.
"Consumers expressed greater pessimism over the outlook in July as higher inflation and greater Delta spread weighed on sentiment," wrote Oxford Economics economist Mahir Rasheed, in a Friday research note.
"Concerns over inflation continue to plague sentiment as buying conditions for housing, vehicles, and other household durables slumped to a new cycle low and their lowest level since the early 1980s," the U.S. economist wrote.
But considering the dovish stance of central banks along with strong corporate earnings as the economy continues to reopen, "it's very, very unlikely that the delta variant is going to create anything like we saw in the pandemic at the front-end," according to Tom Mantione, a managing director with UBS Private Wealth Management.
With stocks trading lower Friday, Mantione suggested in a phone interview that investors might seek buying opportunities in stocks tied to the reopening trade, such as energy and banks, as well as longer-term opportunities in thematic tech trends that could tie into areas like health care.
"In our view, investors can use this volatility to round out portfolios," he said.
Read:Will the passing of the 'performance ba (https://www.marketwatch.com/story/will-the-passing-of-the-performance-baton-keep-u-s-stocks-moving-higher-11627587233)t (https://www.marketwatch.com/story/will-the-passing-of-the-performance-baton-keep-u-s-stocks-moving-higher-11627587233)on' keep U.S. stocks moving higher? (https://www.marketwatch.com/story/will-the-passing-of-the-performance-baton-keep-u-s-stocks-moving-higher-11627587233)
Which companies were in focus?
What did other markets do?
-- Barbara Kollmeyer contributed to this report.
(END) Dow Jones Newswires
July 31, 2021 09:03 ET (13:03 GMT)
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