Wall Street’s main indexes reversed early gains on Friday, with a decline in cyclical stocks outweighing gains in growth stocks, while data showing an unexpected increase in U.S. retail sales in June kept declines at bay.
The Commerce Department said retail sales rebounded 0.6% last month, as spending is shifting back to services, bolstering expectations that economic growth accelerated in the second quarter.
Markets have largely cheered a steady recovery in the labor market this year, but concerns about higher inflation due to a faster-than-expected rebound has hurt sentiment, with investors oscillating between “value” and tech-heavy “growth” names in the past few sessions.
“We got a lot of optimism for the earnings, but then you’ve got fear of inflation and that’s kind of giving us a whipsaw market,” said Dennis Dick, a proprietary trader at Bright Trading LLC.
After earnings from big banks this week, focus will shift to earnings reports from technology-focused companies including International Business Machines Corp, Netflix Inc, Verizon Communications, AT&T, Intel Corp, Snap Inc and Twitter Inc.
“The tech earnings starting next week can make the market forget about those fears (inflation),” said Bright Trading’s Dick.
Six of the 11 major S&P 500 sectors were lower in early trading, with energy stocks falling 1.2%. The sector index has declined more than 5% so far this week and is the top loser among the 11 major sectors, followed by consumer discretionary and materials.
On the other hand, defensives utilities, real estate and consumer staples were the top gaining sectors, as a spike in coronavirus cases, led by the new Delta variant across the globe, reignited worries about a delay in the economic recovery.
Los Angeles County will reimpose its mask mandate this weekend in the latest sign that public health officials are struggling with a rise in cases to worrisome levels in many parts of the United States.
At 10:15 a.m. ET, the Dow Jones Industrial Average was down 65.61 points, or 0.19%, at 34,921.41, the S&P 500 was down 6.50 points, or 0.15%, at 4,353.53, and the Nasdaq Composite was down 9.94 points, or 0.07%, at 14,533.20.
Moderna Inc jumped 9.4% after S&P Dow Jones Indices said the drugmaker will join the S&P 500 index as of the start of trading on July 21, replacing Alexion Pharmaceuticals.
Didi Global Inc fell 0.9% as China sent state officials from at least seven departments to the ride-hailing giant for a cybersecurity review.
Intel Corp added 1.6% after a media report the chipmaker is in talks to buy semiconductor manufacturer GlobalFoundries Inc for about $30 billion.
Advancing issues outnumbered decliners by a 1.56-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.47-to-1 ratio on the Nasdaq. The S&P index recorded 33 new 52-week highs and no new lows, while the Nasdaq recorded 25 new highs and 32 new lows.