U.S. stocks traded lower in early activity on Friday as one of the busiest weeks of the first quarter earnings reporting season comes to a close with investors weighing blockbuster results from e-commerce giant Amazon.com Inc. while keeping an eye on weaker economic data out of China and Europe.
What are major benchmarks doing?
- The Dow Jones Industrial Average DJIA, -0.30% fell 167.74 points, or 0.5%, to 33,892.62.
- The S&P 500 SPX, -0.39% was off 23.59 points, or 0.6%, at 4,187.88.
- The Nasdaq Composite COMP, -0.43% shed 92.51 points, or 0.7%, to trade at 13,990.03.
On Thursday, the S&P 500 posted a record close, rising 0.7%, while the Dow advanced 239.98 points, or 0.7%, and the Nasdaq Composite trailed behind, eking out a gain of 0.2%. Major benchmarks remained on track for solid monthly gains.
What’s driving the market?
Global equities were softer, with analysts noting signs of weaker manufacturing and services activity in China and recession in Europe.
China’s official manufacturing purchasing managers index declined to 51.1 in April from 51.9 in March, according to data released Friday by the National Bureau of Statistics. The reading was much lower than the 51.6 median forecast expected by economists polled by The Wall Street Journal, but remained above the 50 level, marking an expansion in activity.
The eurozone economy shrank at the beginning of 2021 for the second consecutive quarter, entering its second technical recession in a year.
Meanwhile, investors were sifting through earnings, including blockbuster resutls from Amazon.com and disappointing user numbers from Twitter Inc. The past week’s earnings deluge included largely positive results from the world’s largest technology companies.
With just over a half of S&P 500 index companies reporting earnings for the quarter so far, about 87% beat market expectations, the highest level in recent years, according to Refinitiv.
“A key message from many of these tech firms is that the world is moving again, with businesses investing in areas like technology and advertising, and consumers spending,” said Russ Mould, investment director at AJ Bell, in a note.
“This is fine for now but come summer and the market will be looking into 2022 and beyond and thinking more seriously about interest rate hikes following the economic recovery. That threatens to test investors’ optimism,” he said.
Government data showed U.S. personal income jumped by 21.1% in March, after a 7.1% fall in February, while spending surged 4.2%. A core reading of personal consumption and expenditure, or PCE, inflation rose 0.4% in March for a 1.8% year-over-year rise. The employment cost index showed that wages rose 1% in the first quarter and 2.7% over the past year.
The Chicago purchasing managers index for April is set for release at 9:45 a.m., while a final reading of the University of Michigan’s April consumer sentiment index is scheduled for 10 a.m.
Which companies are in focus?
- Amazon.com Inc. AMZN, +1.80% shares rose 1.3% after the company late Thursday announced a second consecutive quarter of more than $100 billion in sales and predicted a third on the way.
- Shares of Twitter Inc. TWTR, -13.09% tumbled nearly 13% after the social-media platform reported increased quarterly revenue on the strength of ad sales, but saw its user numbers fall short of expectations.
- U.S. Steel Corp. X, +3.33% reported sales slightly below expectations and swung to a GAAP profit. Shares of the steelmaker were down 0.9%.
- KLA Corp. KLAC, -3.07% shares were down 1.7%, after the low end of the company’s earnings outlook range fell short of Wall Street’s average estimate even though results for the quarter beat expectations. The company makes the instruments that foundries use to fabricate the silicon wafers that are manufactured into chips.
- Chevron Corp. CVX, -1.75% shares were 2.5% lower after the oil and gas giant on Friday reported a first-quarter profit that topped expectations but revenue that came up short, amid continued weakness in downstream volume and margin due to the COVID-19 pandemic and Winter Storm Uri.
- Exxon Mobil Corp. XOM, -0.32% shares were off 1.4% after the oil giant on Friday reported a first-quarter adjusted profit and revenue that beat Wall Steet expectations, boosted by higher commodity prices and actions to cut costs.
- General Electric Co. GE, +0.98% disclosed Friday that it sold off more of the Baker Hughes Co. BKR, +0.71% shares it owned, likely raising nearly $1 billion. GE shares were up 0.1%, while Baker Hughes fell 1%.
What are other markets doing?
- The yield on the 10-year Treasury note TMUBMUSD10Y, 1.650% was up 0.1 basis point at 1.645%. Yields and bond prices move in opposite directions.
- The ICE U.S. Dollar Index DXY, +0.30%, a measure of the currency against a basket of six major rivals, rose 0.3%.
- Oil futures were under pressure, with the U.S. benchmark CL00, -2.02% down 2.4% at $63.45 a barrel on the New York Mercantile Exchange. Gold futures GC00, +0.04% flipped between small gains and losses around the $1,770-an-ounce level.
- The Stoxx Europe 600 SXXP, +0.02% was off 0.1%, while London’s FTSE 100 UKX, +0.48% rose 0.3%. The Hang Seng Index HSI, -1.97% fell 2% in Hong Kong, while the Shanghai Composite SHCOMP, -0.81% and Japan’s Nikkei 225 NIK, -0.83% each fell 0..8%.