U.S. Stocks Hover Around the Flat Line
October 21 2016 - 3:59PM
Dow Jones News
By Riva Gold
Deal talks and earnings results sparked sharp moves in
individual stocks, while the broader market was steady.
The S&P 500 was little changed Friday but was on track for a
weekly gain. Major indexes have swung between relatively small
losses and gains in recent sessions, and daily stock-trading
volumes have been below the 2016 average.
On Friday, the Dow Jones Industrial Average rose 1 point, or
less than 0.1%, to 18163. The S&P 500 rose less than 0.1% and
was on pace for a 0.4% gain this week. The Nasdaq Composite rose
0.3% Friday.
Shares of Time Warner rose 7.7% after The Wall Street Journal
reported that AT&T was in advanced discussions to acquire the
media company. Shares of AT&T fell 3.2%. Verizon
Communications, which announced lower quarterly revenue and falling
subscriber growth Thursday, fell 1.7%.
Verizon and AT&T dragged down the telecommunications sector
of the S&P 500, which led declines with a 2.4% drop. The
consumer-discretionary sector, which includes Time Warner, led
gains with a 0.8% rise.
Shares of Reynolds American added 15% after cigarette giant
British American Tobacco said it made a $47 billion takeover offer
for the remaining stake in its U.S. peer. Shares of British
American Tobacco fell 2.9% in Europe.
Microsoft shares surged 4.5%, hovering around their record
closing level of $59.56 hit during the dot-com boom in 1999, after
the company beat forecasts for both sales and profit Thursday.
General Electric fell 0.5% as its oil and gas business continued
to weigh on revenue growth in the most recent quarter.
Earnings season has been driving much of the action in the U.S.
stock market lately. Roughly a quarter of S&P 500 companies
have reported so far, and earnings are on track to decline 0.3%
from a year earlier, according to FactSet. That's an improvement
from the 2.1% decline projected by analysts on Sept. 30.
"The macro factors are always going to be in place but it's
going to be pretty quiet between now and the elections," said Trip
Miller, managing partner of Memphis-based hedge fund Gullane
Capital Partners. Investors will be "paying more attention to the
earnings cycle," he said.
Overseas, the Stoxx Europe 600 was unchanged Friday but rose
1.3% for the week, led by a recovery in the banking sector.
Financial shares have risen in the U.S. as well, with the KBW
Nasdaq Bank Index of large U.S. commercial lenders on track for a
3.5% weekly gain.
The U.S. dollar continued its rally amid expectations that the
Federal Reserve would raise interest rates in December. The WSJ
Dollar Index, which measures the dollar against a basket of 16
currencies, was up 0.3% Friday.
Fed funds futures, used by investors to bet on central-bank
policy, suggest a roughly 70% chance of higher rates by the end of
the year, according to CME Group.
"We're in the midst of election fever, but for markets central
banks are way more important," said Tina Byles Williams, chief
investment officer at FIS Group.
The yield on the 10-year U.S. Treasury note was at 1.740%,
according to Tradeweb, compared with 1.745% Thursday. Yields move
inversely to prices.
Traders were also digesting comments from European Central Bank
President Mario Draghi on Thursday, who denied reports that the
bank's stimulus program could end abruptly.
"Mr. Draghi was holding his cards very close to his chest," said
Salman Ahmed, chief investment strategist at Lombard Odier
Investment Managers. He expects the bank to announce an extension
to its bond-purchase program in December.
The euro has fallen roughly 3% against the dollar so far this
month.
The Chinese yuan touched a six-year low against the dollar in
trading in mainland China, and a record low in trading outside of
China at 6.7663.
The Shanghai Composite Index inched up 0.2% for a weekly gain of
0.9%.
Japan's Nikkei Stock Average declined 0.3% for the day but rose
nearly 2% this week, while Australia's S&P/ASX 200 shed 0.2% to
end the week little changed.
The Hong Kong stock market was closed as the city shut down for
a typhoon.
--Daniel Huang contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
October 21, 2016 15:44 ET (19:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.