US Markets

Stocks close mixed; S&P, Dow snap 4-wk win streak

Stocks off session lows
Stocks off session lows

U.S. stocks closed mixed Friday, the last trading day of the month, as encouraging earnings from major tech companies offset negative reports from some energy firms and a disappointing GDP report.

In "an economy that's growing but not robustly, you depend on the growth individual companies can provide," said Bruce McCain, chief investment strategist at Key Private Bank. He noted the latest earnings show "tech is a growth environment."

The Nasdaq 100 closed at an all-time high and hit a fresh 52-week intraday high. The Nasdaq composite closed at a fresh high for the year so far and posted five-straight weeks of gains.

Gains were supported by a rise of more than 3 percent in shares of Alphabet and 0.8 percent in after both firms reported earnings Thursday that beat on both the top and bottom line.

The S&P 500 eked out a gain on the day but ended a touch lower for the week, after four-straight weeks of gains. The index hit a fresh all-time intraday high, with telecommunications and utilities leading advancers. Treasury yields fell sharply after the GDP miss.

The Dow Jones industrial average closed about 24 points lower on the day, with McDonald's and Goldman Sachs contributing the most to declines, The index lost three-fourths of a percent for the week and also broke a four-week win streak.

All three major averages posted gains for the month. The Dow Jones industrial average rose 2.8 percent in July for its first six-month win streak in more than three years.

Major index 12-month performance

U.S. crude oil futures settled up 46 cents, or 1.12 percent, at $41.60 a barrel. Oil held earlier gains after the weekly rig count showed a fifth-straight weekly increase. Earlier, WTI briefly dipped below its 200-day moving average of $40.70 that traders identify as a support area.

The energy sector closed 0.7 percent higher after earlier falling 1.5 percent.

Chevron also reversed losses to close nearly 0.7 percent higher. The firm reported a second-quarter loss of 78 cents a share as it reported $2.8 billion in impairments. The same period last year, the firm reported profit of 30 cents a share. Ex-items, adjusted earnings per share topped expectations by 3 cents at 35 cents a share.

Exxon Mobil closed nearly 1.4 percent lower after posting earnings that badly missed expectations.

The advance read on second-quarter GDP showed a 1.2 percent annualized growth rate, well below expectations for 2.6 percent.

"While the potential for a Federal Reserve increase in September was not particularly high, it's lower now," said Thomas Wilson, managing director of wealth advisory at Brinker Capital.

First-quarter GDP was revised lower to 0.8 percent from 1.1 percent. On Thursday, the Atlanta Federal Reserve sent a shudder through markets when it came out with a new 1.8 percent forecast for the second quarter, off from 2.3 percent the day before.

Consumer spending, which accounted for most of the GDP rebound in the second quarter, increased at a 4.2 percent rate, the fastest since the fourth quarter of 2014, Reuters said. Consumer spending accounts for more than two-thirds of U.S. economic activity.

"The GDP report, it's disappointing with all the revisions. ... On balance, it paints a picture of an economy that is still struggling," said John Canally, chief economic strategist at LPL Financial.

Dallas Federal Reserve Bank President Robert Kaplan told reporters in a Reuters article that "you can't overreact to any one data point ... this number will get revised.

Earlier, San Francisco Fed President John Williams said the central bank is likely to raise rates in the future, not cut them, Dow Jones reported. He also said in the report the Fed needs to take account of its impact overseas and that slow and gradual rate rises are helpful for the international economy.

In other economic news, the employment cost index rose 0.6 percent, on a seasonally adjusted basis, for the three-month period ending June 2016.

Chicago PMI came in at 55.8 in July versus 56.8 in June. Consumer sentiment was 90.0 in July.

Treasury yields were lower, with the around 0.66 percent and the 10-year yield near 1.46 percent.

"We have the technical factors related to month-end buying and weaker GDP data," said Robert Tipp, chief investment strategist and head of global bonds for Prudential Fixed Income.

Gold futures for December delivery settled up $16.30 at $1,357.50 an ounce.

The U.S. dollar index was more than 1 percent lower, with the euro around $1.118 and the yen near 102.1 yen, stronger against the dollar after the Bank of Japan disappointed market expectations for stimulus.

"The Bank of Japan has a history of very strong surprises," said Joe Higgins, managing director, fixed income strategies at TIAA Global Asset Management. He noted that this time, there seemed to be little effort "to match some firepower with the announced fiscal stimulus from the Abe administration. Clearly it'd seem that we are at some point of inflection."

The Nikkei 225 closed about half a percent higher, while the Hang Seng ended more than 1 percent lower and the Shanghai composite was off half a percent.

European stocks were mostly higher, with the STOXX Europe 600 Banks more than 2 percent higher after some major bank earnings and ahead of stress test results, due later in the day.

Other earnings reports included United Parcel Service, which posted earnings in-line with expectations, on revenue that beat. Xerox posted earnings that topped estimates, on revenue in-line with forecasts.

Major U.S. Indexes

The Dow Jones industrial average closed 24.11 points lower, or 0.13 percent, at 18,432.24, with McDonald's leading decliners and Verizon the top advancer.

The closed up 3.54 points, or 0.16 percent, at 2,173.60, with telecommunications leading seven sectors higher and materials the greatest decliner.

The Nasdaq composite closed up 7.15 points, or 0.14 percent, at 5,162.13.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded below 12.

About three stocks advanced for every two decliners on the New York Stock Exchange, with an exchange volume of almost 1.2 billion and a composite volume of 4.0 billion in the close.

High-frequency trading accounted for 49 percent of July's daily trading volume of about 6.57 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.