The Dow Jones Industrial Average fell about 150 points as Caterpillar and Chevron led the declines. The S&P 500 dipped 0.3%. The tech-heavy Nasdaq Composite bucked the trend, climbing about 0.4% as Big Tech shares soared.
A few negative headlines weighed on the broader market despite the blowout numbers from major tech companies:
- Emergency unemployment benefits are set to expire Friday and Congress and the White House still seem far apart on an agreement.
- Dow-component Chevron fell more than 4% after the oil giant reported an $8.3 billion loss in the second quarter as the pandemic “significantly reduced demand.”
- Consumer sentiment deteriorated this month amid a resurgence in new coronavirus cases. University of Michigan’s consumer sentiment index came in at 72.5 for July, down from June’s 78.1 and below Dow Jones estimates of 72.7.
- Stocks linked to an economic recovery like banks and retailers were lower as investors assessed the biggest quarterly gross domestic product contraction on record and persistently weak job growth. JPMorgan and Home Depot were both in the red.
- There could be a so-called sell-the-news effect now that technology companies have delivered strong results to back up their market-leading run.
“Blowout big tech earnings, a better than expected China PMI and strong German retail sales are doing little to offset the disappointment surrounding fiscal package 4 negotiations,” Dennis DeBusschere, macro research analyst with Evercore ISI, said in a note.
Amazon, meanwhile, traded 5% higher as the company saw its sales skyrocket during the coronavirus pandemic. Facebook shares rallied more than 7% as the social media giant posted revenue growth of 11% even amid the coronavirus pandemic slowdown. The company also issued stronger-than-expected sales guidance for the current quarter.
Google-parent Alphabet also posted better-than-expected earnings, but the company’s overall revenue declined for the first time in its history. Revenue for Google Cloud were also just below analyst expectations. Alphabet shares fell more than 4%.
“Obviously, no one was doubting any of those companies so the fact they all exceeded expectations isn’t exactly shocking,” Adam Crisafulli of Vital Knowledge, said in a note Friday. “Investors are now trying to smooth out some of the numbers (i.e. how much of the monster upside was a function of extremely conservative guidance along w/an unsustainable spike in revenue and decline in expenses?)”
Collectively the four stocks were set to add about $200 billion to their total market cap, bringing it to more than $5 trillion combined.
Big Tech has been the stalwart on Wall Street this year. Amazon and Apple are up 65% and 31%, respectively, in 2020. Facebook and Alphabet have risen more than 14% over that time period.
Investors continued to flock to safe-haven assets amid the uncertainty about the economic recovery. Gold futures spiked to an all-time high of $2,005.4 an ounce on Friday, crossing the $2,000 mark for the first time.
Still, the major U.S. equity averages are looking to wrap up the month of July with solid gains. The S&P 500 has gained 4.7% this month through Thursday’s close, on track for its fourth consecutive positive month. The Dow and the Nasdaq Composite have gained 1.9% and 5.2%, respectively, month to date.
— CNBC’s Patti Domm contributed to this report.
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