Stocks traded lower soon after Friday’s opening bell, with earnings reports and disappointing second-quarter GDP estimates factoring into early trade.
The Dow industrials fell 0.4% while the S&P 500 and Nasdaq dropped 0.2%.
GDP, Chicago PMI, July Consumer Sentiment
The economy grew 1.2% in the second quarter, according to an initial GDP estimate from the Commerce Department, effectively level with the first quarter’s 1.1% gain and far below expectations for a 2.6% increase. Prices, on the other hand, jumped more than expected — up 2.2% vs. a 0.4% increase in the first quarter and above views for a 1.8% gain.
Labor costs were in line with expectations, with the Labor Department’s Employment Cost Index up 0.6% during the second quarter.
An update on July Midwest manufacturing from Kingsbury International’s Chicago Purchasing Managers’ Index is up next at 9:45 a.m. ET, followed by the University of Michigan’s July Consumer Sentiment Index at 10 a.m.
San Francisco Federal Reserve Bank President John Williams speaks at 9:30 a.m. ET. Dallas Fed President Robert Kaplan speaks at 1 p.m.
Amazon, Google, Expedia In Motion
Google parent Alphabet rose 3.7% in morning trade as its second-quarter earnings bounced back from a first-quarter miss, topping analysts’ expectations.
Amazon climbed less than 1% after handily clearing analysts’ second-quarter targets and giving generally healthy guidance, but gains were moderated somewhat by weaker-than-expected third-quarter operating income guidance. One of IBD’s Leaderboard stocks, Amazon ended Thursday’s session just off its July 12 high and extended after a June rebound from its 10-week moving average.
Beyond tech stocks, Rubbermaid products maker Newell Brands (NWL) climbed 7% on stronger-than-forecast second-quarter earnings and revenue. The report marked Newell’s first quarter since its $15.4 billion acquisition of Jarden in April.
Stamps.com (STMP) was an early winner, but reversed to trade down nearly 8%.
Railcar manufacturing and leasing operation Trinity Industries (TRN) surged 6.5% after its quarterly results.
On the downside, Expedia (EXPE) dropped 3% after a mixed second-quarter report. Expedia is considering spinning off its majority stake in Trivago, a unit that brought in $201 million in second-quarter sales, up 41% vs. the year-earlier period.
Wynn Resorts (WYNN) dived 7.5%, despite stronger-than-forecast Q2 revenue and earnings. The company said it had received far fewer table permits than requested for its new $4.2 billion casino in Macau, China.
Oil, Bonds, International Trade
Oil prices were under some early pressure, with West Texas Intermediate down a fraction and near $41 a barrel, and Brent crude off more than 1% and just above $42. Gold ticked up 1% to above $1,344 an ounce. The dollar moved broadly lower, and the 10-year Treasury yield reversed, slipping 2 basis points to 1.49%.
In the other global markets, China’s leading indexes slipped on Friday, while Tokyo’s Nikkei 225 bumped up 0.6% after the Bank of Japan voted for a mild increase in its monetary stimulus measures. Europe’s markets were mixed, with up and down gaps widening in afternoon trade.
Techs, Small Caps Lead In July
As the stock market heads into the final trading session of July, tech stocks and small caps have been the month’s clear leaders. The Nasdaq climbed 6.5% for the month through Thursday, giving the index a 2.9% year-to-date gain. The S&P 500’s July gain was 3.4% through Thursday, its fifth straight monthly advance, putting it 6.2% above its Dec. 31 close.
Blue chips lagged the market, with the Dow industrials up 2.9%. Among the small-cap gauges, the Russell 2000 showed a 5.7% gain through Thursday and the S&P Smallcap 600 advanced 4.9%, rising to new highs mid-month, then holding its ground.