Stocks rise despite signs of peak
Most U.S. stocks edged higher Friday as the debate continued over whether better-than-forecast corporate earnings are enough to offset signs the economy may be cooling. Yields on benchmark Treasuries declined for a second day after reaching a more than four-year high.
“Signs of slowing global economic growth, rising interest rates, higher commodity prices and lingering trade uncertainty are all fueling concern profit margins may be peaking,” Alec Young, managing director of global markets research at FTSE Russell, said in an email.
The S&P 500 index gained 2.97 points, or 0.1 percent, to 2,669.91. The Dow Jones industrial average lost 11.15 points, or less than 0.1 percent, to 24,311.19. The Nasdaq composite rose 1.12 points to 7,119.80. The Russell 2000 index of smaller-company stocks lost 1.66 points, or 0.1 percent, to 1,556.24. Most of the stocks on the New York Stock Exchange finished higher.
After reporting strong results, tech giants including Microsoft, Intel and Amazon. com had a tough time holding on to all their gains. At its high of the day, the S&P 500 Information Technology Sector was up 1 percent, but by midday it dropped into the red before closing slightly higher. It’s a pattern that’s plagued this earnings season: Even though companies are beating earnings predictions at the fastest rate ever, stocks have remained relatively flat since JPMorgan kicked off reports.
Amazon said its first-quarter profit more than doubled as consumers shopped more online and revenue from its cloud computing business continued to rise. The results were far stronger than Wall Street expected, and the stock jumped 3.6 percent to $1,572.62, adding to Thursday’s 4 percent gain. Amazon also said it will raise the price of an annual Prime membership to $119 from $99 in the U.S.
The slew of first-quarter growth figures are the latest clues on the health of the global economy, which is preoccupying investors amid growing signs of a peak in the cycle and against a backdrop of rising rates. The murky outlook is threatening to outweigh the impact of both a solid earnings season and easing geopolitical tension.
“Interest rates, the 10-year, is the biggest issue that kind of hangs over the market,” said Kim Forrest, senior portfolio manager at Fort Pitt Capital Group LLC in Pittsburgh. “It can bring the party to an end — and by ‘party,’ I mean the actual economic activity on Main Street that is driving Wall Street right now.”
Elsewhere, crude oil held above the $68-a-barrel level as a geopolitical risk premium in the market limited losses. Prices have been supported by investors waiting to see whether the nuclear accord that Iran signed with world powers in 2015 will remain.
Even with help from climbing oil prices, Exxon Mobil’s results still fell short of estimates and its stock dropped 3.8 percent to $77.79. Cable company Charter Communications tumbled 11.7 percent to $263.33. Jefferies & Co. analyst Scott Goldman said the company’s residential video and high-speed data subscriber totals were both weaker than he expected.
Technology companies also gave up an early gain. Intel rose 5 percent in the morning but later dipped 0.6 percent to $52.73. After a big rally in the morning, Microsoft rose 1.7 percent to $95.82.