Summer doldrums grip Wall Street
NEW YORK — On the stock market, Friday was the ho-hum capstone to a ho-hum week, where unimpressive earnings kept investors feeling wary.
All three major indexes ended lower, and almost everything about the day screamed summer. Earnings season was quickly receding, with more than 90 percent of Standard & Poor’s 500 company already reporting second-quarter results. The only major economic data point that the government released was wholesale inventories — hardly the most closely watched indicator. Those still at work joked that all their colleagues had already taken off for the Hamptons.
“Practically the whole financial world is there today,” said Jeff Sica, from his office at Sica Wealth Management, where he is president and chief investment officer, in Morristown, N.J. For the record, he wasn’t planning a trip there.
In all, it was a stark change from previous weeks — the Dow Jones industrial average and the S&P 500 hit all-time closing highs exactly one week before.
The Dow, the S&P 500 and the Nasdaq composite were down not just on the day but also for the week. For the Dow, that meant its first weekly loss in seven. Investors couldn’t pinpoint a specific reason for Friday’s decline.
“There’s no specific culprit here, but the market seems to be tired,” said Robbert Van Batenburg, director of market strategy at Newedge in New York.
But they said that the week in general — a week when neither the Dow nor the S&P 500 rose on any day except Thursday — was weighed down by companies’ uninspired quarterly earnings reports. There are also worries that the market has already reached its highs for the year and doesn’t have room to grow. The S&P 500 is up 19 percent for the year.
Recent comments from Federal Reserve officials make it seem likely that the Fed will soon pull back on its stimulus measures, which are meant to prop up the economy and the stock market, and some investors worry that yanking off the Fed Band-Aid will reveal underneath an economy that can’t stand on its own.
The Dow Jones industrial average was down 65 points, or 0.4 percent, to 15,432 at 3:40 p.m. The S&P 500 index was down five points, or 0.3 percent, to 1,692. The Nasdaq composite was down seven points, or 0.2 percent, at 3,662.
The exception was the Russell 2000, a lesser-known index that tracks 2,000 companies with small market valuations. It recorded the tiniest of gains, up 1 point, or 0.1 percent, to 1,050.
Investors weren’t paying too much attention to the disparity. Sica said the Russell was up because mutual funds were selling stakes in bigger companies, which affect the other indexes, to meet investors’ demands for liquidation.
J.C. Penney was one of the few companies making news. Shares fell 7 percent as the company’s board bickered with its largest shareholder, hedge fund manager Bill Ackman, over how quickly the company should replace its interim CEO. The stock was down 91 cents to $12.75.
Other developments were hardly enough to energize the lollygagging stock indexes. The government reported that sales for U.S. wholesalers increased — but wholesalers also cut their stockpiles for a third straight month, an indication that they’re uncertain about future demand.
Profits at S&P 500 companies have been up less than 5 percent in the second quarter, according to S&P Capital IQ. That’s less than analysts were expecting when they made forecasts at the beginning of the year, and even the relatively small earnings gains are built not on business growth but on cost-cutting. Revenue is down 0.6 percent so far this quarter.
Economic data from China came in, for the most part, better than expected, with inflation steady and industrial production up. But investors seemed to be taking the news in stride. Van Batenburg cautioned that the new data hardly signaled that the world’s second-largest economy was healed.
“It’s one data point, it’s not a panacea,” Van Batenburg said. “I think the jury is still out on China.”
Among stocks making big moves:
— BlackBerry jumped after Reuters reported that the company may be growing more amenable to going private. The stock rose 71 cents, or 8 percent, to $9.94.
— Priceline.com rose a day after the travel website announced earnings that trumped analyst expectations. The stock rose $46.79, or 5 percent, to $980.50. If the stock goes above $1,000, it would be the first in the S&P 500 to do so.
—Noodles & Co., the restaurant chain, plummeted after it predicted that sales growth at established restaurants would slow down. The stock plunged 10 percent, down $4.63 to $42.65.