By Anora Mahmudova and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market gave a lukewarm
greeting to the first earnings report from the country's banks, and
the early losses kept main benchmarks on track to finish the week
with modest losses.
The energy and financial sectors led decliners on the S&P
500, while telecoms led the gainers.
The S&P 500 (SPX) was off 1 point at 1,963.62. The Dow Jones
Industrial Average (DJI) dropped 18 points, or 0.1% to
16,897.27.
The Nasdaq Composite (RIXF) was 9 points, or 0.2%, higher at
4,404.97 but still on track for a week of steep losses.
Follow MarketWatch's live blog of today's stock-market
action.
Kim Caughey Forrest, senior equity analyst at Fort Pitt Capital,
explains the reason behind shallow pullbacks.
"There are lots of investors with cash who missed out on
spectacular gains in 2013, so every time they see a dip, they are
buying it. I suspect that often it is a retail investor, because
institutional investors are more disciplined," Forrest said.
Banking heavyweight Wells Fargo & Co. (WFC) kicked off the
reporting season for the financial sector with headline earnings
that were in line with expectations. But the stock fell 1% as
analysts delved into the details.
Tobacco giant Reynolds American Inc. (RAI) confirmed it is in
talks with Lorillard Inc. (LO) about a possible acquisition.
Lorillard shares rose 4.9%.
Mortgage insurers, incluing Genworth Financial Inc.(GNW), fell
in response to new proposed capital requirements by the Federal
Housing Finance Agency. Genworth slid 5.6% to lead S&P
decliners.
Fastenal Co.(FAST), which makes fasteners, tools and other
industrial and construction supplies, fell 5.8% in the wake of
second-quarter earnings.
An influential broadcaster in China said the location-tracking
function in Apple Inc.'s (AAPL) iPhone was a "national security
concern," in the latest backlash against U.S. tech firms. Read
about more of the day's notable movers here.
Fed speakers
Three members of the Federal Reserve speak later in the day. In
Jackson Hole, Wyo., Philadelphia Fed President Charles Plosser at
11:15 a.m. Eastern Time will moderate a panel on entrepreneurial
issues at the Global Interdependence Center's Rocky Mountain
Summit.
Plosser is known as a hawk and is a voting member of the Fed's
policy committee this year. Plosser last month said the federal
funds rate should be raised starting in the third quarter, and that
rates should be higher because the central bank is nearing its
goals faster than many expected.
At 3 p.m. Eastern Time, Charles Evans, the president of the
Chicago Fed, and Dennis Lockhart, president of the Atlanta Fed
Bank, will be on a panel about success and failures of Fed policy.
Lockhart has said he expects short-term rates will be held at zero
until the latter half of 2015, while Evans has said it may not be
until 2016 that the Fed starts on its rate-hike path. Evans and
Lockhart are not voting members on the policy committee this
year.
European stocks bounce, oil drops
In overseas markets, European stocks were bouncing back Friday
after Thursday's drop, which came as Portuguese conglomerate
Espírito Santo International SA this week missed a payment on some
short-term debt. That sent shares of its subsidiaries, Banco
Espirito Santo AS and Espirito Santo Financial Group SA, spiraling
lower.
Overnight in Asia, Japan's Nikkei Average fell 0.3% and Hong
Kong's Hang Seng Index ended flat.
Among commodities, crude for August delivery (CLQ4) fell $1, or
1%, to $101.92 a barrel. August gold (GCQ4) fell $2 to $1,337.3 an
ounce.
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