Dismal earnings and forecasts from two bellwethers dragged the S&P 500 and Nasdaq lower on Friday. However, the blue-chip index escaped a finish in the red aided by strength from an important component, American Express. Economic data was mixed too and failed to prevent the S&P 500 and Nasdaq from posting weekly losses. The Dow registered its first weekly gain this year.
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The Dow Jones Industrial Average (DJI) gained 0.3% to close at 16,458.56. The Standard & Poor 500 (S&P 500) dropped 0.4% to finish Friday’s trading session at 1,838.70. The tech-laden Nasdaq Composite Index closed at 4,197.58, down 0.5%. The fear-gauge CBOE Volatility Index (VIX), however, declined 0.7% to 12.44. Composite volume on the New York Stock Exchange was 3.6 billion. Advancing stocks were outnumbered by the decliners on the NYSE as for every three stocks that ended lower, two stocks gained.
The day’s action was dominated by earnings performances and forecasts. However, bellwethers like Intel Corporation (NASDAQ:INTC) and General Electric Company (NYSE:GE) hardly announced anything to drive the bullish mood.
Intel lagged earnings estimates and forecasted weak revenues. The tech-heavyweight reported fourth-quarter earnings of 51 cents per share, lower than the Zacks Consensus Estimate by a penny. It forecasted first-quarter revenues of about $12.8 billion, reflecting a 7.5% sequential decline. Shares of Intel dropped 2.6% following the news.
Also, General Electric dented the mood on Friday after its profit margins in industrial segment fell short of its own guidance. The company also witnessed a 5% year-over-year decline in revenues in the GE Capital segment. Shares of General Electric were down 2.3%.
Meanwhile, United Parcel Service, Inc. (NYSE:UPS) chopped its profit estimates. It forecasted fourth quarter earnings at $1.25 a share, down from its prior projection of $1.43. The reduced outlook dented shares of this delivery company by 0.6% and peer FedEx Corporation (NYSE:FDX) too suffered a 0.9% drop.
However, there some good numbers were also released, which helped only the Dow to finish in the positive zone. Dow component American Express Company (NYSE:AXP) reported a more than double jump in its fourth-quarter profit. AmEx’s quarterly operating earnings per share came in at $1.21, soaring from 56 cents a share in the year-ago quarter.
AmEx’s shares jumped 3.6% following the announcement, helping the Dow end higher on Friday. Also, Dow’s gains on the closing day of the week ensured the first weekly gain of this year. However, the S&P 500 and Nasdaq closed the week with losses of 0.2% and 0.6%, respectively, even as the Dow gained 0.1%.
Apart from the earnings numbers and forecasts, markets also received a mixed bag of economic numbers. The U.S. Census Bureau and the Department of Housing and Urban Development jointly reported that building permits were down 3% from November’s revised reading to a seasonally adjusted annual rate of 986,000 in December. Also, housing starts were down 9.8% in the same timeframe to a seasonally adjusted annual rate of 999,000 in December. Economists had been expecting it to decline to 990, 000.
The housing sector had to settle significantly lower though, and the SPDR S&P Homebuilders ETF (XHB) dropped 1.3%. Stocks including KB Home (NYSE:KBH), PulteGroup, Inc. (NYSE:PHM), Lennar Corp. (NYSE:LEN) and DR Horton Inc. (NYSE:DHI) declined 0.8%, 1.7%, 2.5% and 1.5%, respectively.
Separately, industrial production gained 0.3% in December. Fourth quarter industrial production jumped at a yearly rate of 6.8%, the fastest gain in about three and half years. On the other hand, the Thomson Reuters/University of Michigan’s preliminary reading of consumer sentiment stood at 80.4 in January. This dropped from December’s reading of 82.5. It was also lower than the consensus estimate of a reading of 83.4.
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