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Stocks falter, but S&P 500 has its second up week in a row

Wall Street
A Wall Street sign near the New York Stock Exchange.
(Stan Honda / AFP/Getty Images)

The Standard & Poor’s 500 index closed out an uneven week of trading on Wall Street with its second straight weekly gain, even though stock indexes lost ground Friday.

Technology companies led the slide, which erased the major U.S. indexes’ gains from the day before. Communication services, industrial and healthcare stocks also fell, outweighing gains in real estate companies, banks and elsewhere in the market.

Investors continued to focus on company earnings reports, searching for a clearer picture of the U.S.-China trade war’s effects on companies and the broader economy.

“To some extent, the bleeding’s stopped, but now you need to figure out how healthy the patient is,” said Willie Delwiche, investment strategist at Baird. ”Earnings help with that, and economic data that we receive over the next couple of months will help with that.”

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The S&P 500 index fell 11.75 points Friday, or 0.4%, to 2,986.20. The index is 1.3% below the all-time high it set in July.

The Dow Jones industrial average dropped 255.68 points, or 1%, to 26,770.20. The Nasdaq fell 67.31 points, or 0.8%, to 8,089.54. The Russell 2000 index of smaller-company stocks fell 6.36 points, or 0.4%, to 1,535.48.

All told, the S&P 500 ended the week with a gain of 0.5%. Last week, it notched a 0.6% gain. Smaller stocks outpaced the broader market, a sign that investors were growing more confident. The Russell 2000 ended the week with a gain of 1.6%; last week, it rose 0.8%.

Bond prices were little changed Friday. The yield on the 10-year Treasury held steady at 1.75%.

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While trading turned choppy this week, investors mostly applauded companies’ results so far, including those from JPMorgan Chase, UnitedHealth Group and railroad operator Kansas City Southern.

That helped investors temporarily brush aside worries over the U.S.-China trade conflict. The early round of mostly good results could also help calm investors’ fears about another dismal forecast for earnings growth.

For companies in the S&P 500, analysts expect profit to shrink nearly 5%, according to FactSet. Still, forecasts for declines in the first and second quarters were tempered as reporting progressed, and companies finished those earnings seasons with only tiny contractions instead.

Earnings forecasts in the third quarter are low enough that most companies should beat them, Delwiche said.

“The question is what happens with 2020 earnings,” he said. ”You still have robust 2020 numbers out there. Those likely need to come down.”

Chipmakers helped drag down technology-sector stocks Friday. Micron Technology dropped 4.5%. Nvidia fell 2%.

Communication services stocks also accounted for a big slice of the selling. Netflix led the slide, tumbling 6.2%.

Boeing declined 6.8%, lead industrial-sector stocks lower, after news that the aircraft manufacturer waited months to disclose troubling internal communications between two of its employees about its now-grounded 737 Max jet.

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ETrade Financial climbed 4.6% after reporting surprisingly good third-quarter profit.

Coca-Cola advanced 1.8% after the company edged out Wall Street’s third-quarter revenue forecasts on improved sales of Coca-Cola Zero Sugar and other drinks.

Meanwhile, Johnson & Johnson fell 6.2% after the company said it is recalling a single lot of its baby powder because a test found trace amounts of asbestos in one bottle.

Another busy week of corporate earnings reports is coming up. McDonald’s is to report on Tuesday; Boeing and Microsoft, on Wednesday; and Amazon and American Airlines Group, on Thursday.

Benchmark crude oil fell 15 cents to settle at $53.78 a barrel. Brent crude oil, the international standard, fell 49 cents to close at $59.42 a barrel. Wholesale gasoline stayed at $1.62 a gallon. Heating oil stayed at $1.95 a gallon. Natural gas stayed at $2.32 per 1,000 cubic feet.

Gold fell $4.10 to $1,488.20 an ounce. Silver fell 4 cents to $17.50 an ounce. Copper rose 4 cents to $2.63 a pound.

Stock indexes in Europe closed broadly lower ahead of a weekend vote by Britain’s Parliament on the latest proposed deal covering its exit from the European Union. Britain is set to leave the trading bloc Oct. 31.


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