Stocks end week on sour note as investors jeer earnings
US Treasury yields lower ahead of Fed, BoJ meetings
World shares fell on Friday as corporate results and economic data failed to wow investors, leaving them to stew over trade tariffs and central bank policies.
The MSCI All-Country World Index, which tracks shares in 47 countries, was down 0.20 per cent, though it still marked its fourth weekly advance.
Investors surveyed a host of second-quarter corporate results, punishing those that came up short, including Intel Corp, down 8.6 per cent after its fastgrowing data-centre business missed estimates. ExxonMobil Corp fell 2.8 per cent and Twitter Inc sank 20.5 after their results. Data showed the US economy grew at its fastest pace in nearly four years during the second quarter, as consumers boosted spending and farmers rushed soybean shipments to China to beat retaliatory trade tariffs before they took effect in early July.
But the economic growth figures were widely expected.
“The terrible tariff talks has been a real damper on what has been a banner earnings season,” said Matt Schreiber, president at WBI Investments. The Dow Jones Industrial Average fell 76.01 points, or 0.3 per cent, to 25,451.06, the S&P 500 lost 18.62 points, or 0.66 per cent, to 2,818.82 and the Nasdaq Composite dropped 114.77 points, or 1.46 per cent, to 7,737.42. Bonds did not sell off on positive news, either. Benchmark 10-year US Treasury yields slipped from their highest level in 1-1/2 months and last rose 4/32 in price to yield 2.9598 per cent, from 2.975 per cent late on Thursday. Rates markets await an important week of meetings at the US2 Federal Reserve and Bank of Japan (BoJ). Earlier speculation that the BoJ might tweak its policies rattled global markets. The bank’s aggressive efforts to keep yields in its own markets low has pushed investors to markets elsewhere, keeping a lid on yields worldwide.
Japan’s 10-year government bond yield hit one-year highs even as the BOJ conducted special, unlimited buying for the second time last week that kept the debt’s yields from rising.
Oil prices fell on Friday, weighed down by a drop in the US equities market, but Brent still marked a weekly increase, supported by easing trade tensions and a temporary shutdown by Saudi Arabia of a key crude oil shipping lane.
Brent crude futures fell 25 cents to settle at $74.29 (Dh272.64) a barrel, but notched a 1.8 per cent weekly increase, its first increase in four weeks.
US West Texas Intermediate (WTI) crude futures fell 92 cents to settle at $68.69 a barrel, and marked a fourth week of declines, falling about 2.4 per cent.
Depressing oil prices, US stock markets broadly fell on Friday.
Crude futures at times track with equities. “That could show some sign of a slowdown in the economy, which could in turn affect oil consumption,” said Phillip Streible, senior market strategist at RJO Futures.
The oil market largely brushed off government data on Friday that said the US economy grew in the second quarter at its fastest pace in nearly four years.
“It was a strong number that suggests strong energy demand into the end of the year,” said Phil Flynn, analyst at Price Futures Group in Chicago. “The reason why we’re not rallying off that is because it came in line with expectations, but when you’re running that kind of a GDP, that’s a lot of oil.” US energy companies added three oil rigs in the week to July 27, the first time in the past three weeks that drillers have added rigs, General Electric Co’s Baker Hughes energy services firm said on Friday.