Stocks Fall as Investors Parse Latest Batch of Earnings Reports
DOW JONES & COMPANY, INC. 10:09 AM ET 7/21/2017
Global equities slipped Friday as investors continued to closely watch the latest round of corporate earnings.
The Dow Jones Industrial Average fell 86 points, or 0.4%, to 21525. The S&P 500 and Nasdaq Composite fell 0.3%. Both indexes were still on track to end the week higher, though declines Friday would end the Nasdaq's 10-session winning streak. That's the tech-heavy index's longest such streak since February 2015.
With U.S. stocks resting near record highs, many analysts say robust corporate earnings and forecasts are needed to help push equity benchmarks even higher.
Shares in General Electric declined 3.5%, placing it among the worst performers in the S&P 500, 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.
Shares in eBay, meanwhile, fell 1.5% after the e-commerce company late Thursday reported earnings that were largely in line with analysts' expectations.
Microsoft shares slipped 0.8%, despite Thursday posting a jump in profits that beat analyst expectations. Even though many large-cap companies have outperformed earnings expectations this week, some analysts are concerned that future projections are getting out of hand.
"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 have also kept a close eye on central bank meetings in Europe and Japan this week following recent signals from several policy makers that the end is nearing for the easy-money policies that have supported financial markets in recent years.
The euro was up 0.1% recently against the dollar at $1.1639, a day after leaping 1% when European Central Bank President Mario Draghi reaffirmed his confidence in the eurozone economy and said the central bank would discuss the future of its massive asset-purchase program in the fall. The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was recently down 0.2% Friday, on track for its lowest close since October.
Many investors expect global central banks to move slowly when withdrawing the monetary stimulus because economic growth has remained tepid in many parts of the developed world.
"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.
The yield on the 10-year U.S. Treasury note fell to 2.243%, according to Tradeweb, from 2.266% on Thursday. Yields fall as prices rise.
Riskier eurozone debt, meanwhile, continued to rally, with Italian and Portuguese bonds outperforming.
"People seem quite happy buying everything at the moment," said James Athey, senior investment manager at Aberdeen Asset Management, who said many investors are now expecting a quiet few weeks following the conclusion of this week's central bank meetings.
"It feels like the end of July, all of August can be a pretty decent period for markets," he said.
European stocks were broadly lower, dragged down by a fall in auto and construction stocks. The Stoxx Europe 600 was recently down 1%.
Equities across the Asia-Pacific region were mostly lower on Friday. Japan's Nikkei Stock Average ended 0.2% lower and Hong Kong's Hang Seng Index fell 0.1%.
--Amrith Ramkumar contributed to this article.
Write to Christopher Whittall at christopher.whittall@wsj.com
(END) Dow Jones Newswires
07-21-171009ET
Copyright (c) 2017 Dow Jones & Company, Inc.
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
Yeats
