By Mark DeCambre and Wallace Witkowski, MarketWatch
Stocks rise cautiously, but not setting any new all-time
highs
U.S. stocks climbed to near their best levels of the session
Friday, putting them on track for a fourth week of gains, as a
rally in telecoms stocks offset weakness in the industrial
sector.
Friday's early trading has been marked by mostly cautious moves
as investors await next week's important policy statement from the
Federal Reserve.
The S&P 500 Index advanced 8 points, or 0.4%, to 2,173,
boosted by more than 1% jumps in both telecom and utilities.
Telecom and utilities are typically viewed as defensive
sectors.
Nine of the S&P 500's 10 sectors were trading in positive
territory, with a fractional loss in industrials dragging on the
index. On Wednesday, the index closed at a record high of
2,173.02.
The Dow Jones Industrial Average rose 34 points, or 0.2%, to
18,552, led by gains in American Express Co.(AXP), Microsoft
Corp.(MSFT), and Verizon Communications Inc. (VZ), and hampered by
declines in General Electric Co. (GE) and Caterpillar Inc. (CAT)
The gains come after the blue-chip gauge snapped its nine-session
win streak on Thursday.
Meanwhile, the Nasdaq Composite Index rose 26 points, or 0.5%,
at 5,103 as the tech sector drew bidders, putting it on track for
its highest close of 2016.
A batch of mostly better-than-expected earnings has offered some
cause for cheer among investors and provided some support for
equities to climb with earnings season a third of the way complete,
said Jonathan Golub, chief equity strategist at RBC Capital
Markets.
Second-quarter profits are on track to show a contraction of
4.2% with more than 100 companies in the S&P 500 already out
with quarterly results, according to FactSet data. That compares
with an estimate of a fall in profit of 5.3% in the second quarter,
according to an average estimate of analysts polled by FactSet.
"The reason we study earnings is to get a sense of where things
are going not where they've been and I think that if there was a
vulnerability going into earnings season that people were concerned
about negative growth rate, it really looks like that fear is going
away," Golub said.
Quincy Krosby, market strategist at Prudential Financial, said
wobbly stock moves over the past few sessions make sense,
considering the sizable swing higher for equities over the past
week.
"Typically, when a market moves higher toward new highs it tends
to wait to adjust for the next new catalyst," Krosby said.
For Wall Street, the next impetus likely will be the two-day Fed
policy meeting slated for July 26-27. Although the central bank
isn't expected to push benchmark rates higher, market participants
will pore over the updated policy statement for clues on the pace
and timing of the next rate hike, which could influence the U.S.
dollar, Treasurys and the broader stock market.
"That statement is going to be very important for the market if
it suggests that a rate hike is in the offing," Krosby said. The
Wall Street Journal reported Fed members, which have vacillated in
their policy intentions, are gaining more confidence about a rate
hike sometime this year, and as early as September
(http://www.wsj.com/articles/fed-officials-gain-confidence-they-can-raise-rates-this-year-1468922401).
Worries about the effects of the U.K.'s decision to leave the
European Union, along with a dismal May employment figure
(http://www.marketwatch.com/story/us-gains-just-38000-new-jobs-in-may-2016-06-03),
had been among the reasons the central bank has cited as giving it
pause in lifting interest rates.
"The market is very interested in what the Fed has to say in its
statement next week, and we may have to get through that before the
market takes a definitive move in one direction or another," Krosby
said.
On Thursday, the Dow snapped a nine-session string of gains and
ended a streak of all-time closing highs at seven. That came in
part as chip maker Intel Corp.(INTC) sank 4% on a disappointing
quarterly revenue result
(http://www.marketwatch.com/story/intels-quarterly-earnings-beat-expectations-while-revenue-falls-short-2016-07-20).
The Dow's run of record highs and daily wins were the longest since
March 2013.
"Stock markets entered a slippery decline during trading on
Thursday, as the terrible combination of disappointing earnings,
central bank inaction and recurrent concerns over the global
economy weighed heavily on sentiment," said Lukman Otunuga, FXTM
research analyst, in a note.
Still, the Dow, Nasdaq Composite and S&P 500 could notch a
fourth consecutive weekly gain, marking their longest weekly win
streaks since five straight weekly gains ended March 18, according
to FactSet data.
Data: Markit's preliminary reading of its manufacturing
purchasing managers index came in at 52.9 for July from 51.3 in the
prior period, beating analysts polled by FactSet, who were looking
for a reading of 51.5. A reading above the 50 level indicates
expansion.
Fed speakers: There are no Fed speakers, as policy makers head
into their July meeting.
Corporates: Ahead of the bell, industrial conglomerate General
Electric Co.(GE) posted a 15% rise in second-quarter revenue
(http://www.marketwatch.com/story/ge-swings-to-profit-revenue-rises-15-2016-07-22)
but a 2% decrease in orders. GE shares slipped 1.9%.
Whirlpool Corp.(WHR) issued second-quarter earnings and sales
(http://www.marketwatch.com/story/whirlpool-reports-better-than-expected-q2-earnings-sales-and-raises-full-year-guidance-2016-07-22)
that outstripped expectations. The appliance maker also raised its
full-year earnings forecast. Its shares were up 2.7%.
Honeywell International Inc. (HON) shares tumbled 2.4% after the
company posted second-quarter earnings
(http://www.marketwatch.com/story/honeywell-international-cuts-revenue-outlook-2016-07-22)
that beat expectations, but sales were below consensus. The
industrial-sector heavyweight raised the low end of its full-year
per-share earnings view and said it is creating two new business
segments.
VF Corp.(VFC), whose apparel brands include Wrangler, Lee and
The North Face, turned in second-quarter earnings
(http://www.marketwatch.com/story/vf-corp-q2-earnings-beat-on-eps-miss-on-revenue-lowers-2016-sales-outlook-2016-07-22)
that were above expectations. Revenue, however, missed and VF
lowered its 2016 sales outlook. Shares were 0.8% lower.
American Airlines Group Inc.'s(AAL) second-quarter per-share
earnings
(http://www.marketwatch.com/story/american-airlines-posts-quarterly-declines-2016-07-22)
met analyst expectations while revenue was slightly ahead of Wall
Street's estimate. Its shares climbed 3.7% in early trading.
Shares of Advanced Micro Devices Inc.(AMD) jumped 14% after the
chip maker late Thursday swung to a quarterly profit
(http://www.marketwatch.com/story/advanced-micro-devices-swings-to-a-profit-2016-07-21-17485351)
and reported its first sales increase in almost two years.
Starbucks Corp. shares (SBUX) gained 0.5% after the
Seattle-based coffee retailer missed its quarterly sales target
(http://www.marketwatch.com/story/starbucks-blames-social-unrest-after-sales-miss-2016-07-22),
citing international and domestic political and social unrest as
the reason for its disappointing results.
Boeing (BA)warned second-quarter charges could reach $2.05
billion
(http://www.marketwatch.com/story/boeing-shares-lower-after-company-forecasts-205-billion-q2-charges-2016-07-21).
Chipotle Mexican Grill Inc. (CMG) shares rose 5% after the
company posted an 82% slide in quarterly profit
(http://www.marketwatch.com/story/chipotle-profit-plunges-as-sales-slide-2016-07-21-16485427)
late Thursday. The restaurant chain enacted costly promotions to
win back customers following outbreaks of foodborne illness last
year.
PayPal Holdings Inc.(PYPL) shares dropped 7.3% after the
payment-services provider late Thursday posted a rise in revenue.
It also announced a deal that will make it easier for consumers to
use a Visa credit or debit card
(http://www.marketwatch.com/story/consumers-win-as-visa-and-paypal-go-from-enemies-to-frenemies-2016-07-21)
when paying with PayPal.
Visa Inc.(V), meanwhile, posted a 76% decline in quarterly
earnings
(http://www.marketwatch.com/story/visa-earnings-drop-on-deal-related-charges-2016-07-21)
on charges related to a deal for its European operations. The
financial company's shares rose 0.7%.
Other markets: Gold futures settled down 0.6% to $1,323.40 an
ounce for a weekly loss of 0.3%
(http://www.marketwatch.com/story/gold-stumbles-on-track-for-back-to-back-weekly-loss-2016-07-22).
The U.S. Dollar Index was up 0.5% at 97.47. Oil futures continued
declining, falling down 1.8% at $43.94 a barrel, after weekly
rig-count data showed its fourth increase in a row
(http://www.marketwatch.com/story/baker-hughes-reports-fourth-straight-weekly-climb-in-us-oil-rig-count-2016-07-22).
European stocks shed 0.2% a day after the European Central Bank
left monetary policy unchanged. In Japan, the Nikkei Average ended
1.1% lower, as Asian markets fell
(http://www.marketwatch.com/story/asian-markets-slip-after-ecb-expectations-fall-short-2016-07-21).
(http://www.marketwatch.com/story/asian-markets-slip-after-ecb-expectations-fall-short-2016-07-21)--Carla
Mozee in London contributed to this article.
(END) Dow Jones Newswires
July 22, 2016 14:43 ET (18:43 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.