NEW YORK: The S&P 500 saw a slight decline on Friday, as bank and financial shares dipped following the release of quarterly reports, signaling the start of earnings season. However, despite the dip, all three major US stock indexes ended the week with solid gains.
Offsetting some of the declines, UnitedHealth Group’s stock rallied after reporting stronger-than-expected results. While JPMorgan Chase shares rose by 0.6%, Wells Fargo eased by 0.3%. The S&P 500 banks index fell by 0.9%. Both major banks reported higher quarterly profits but have set aside more money for expected losses from commercial real estate loans.
The primary drags on the benchmark index were the energy sector, down 2.8%, and financials, down 0.7%. On the positive side, UnitedHealth shares jumped 7.2%, contributing to the Dow’s upward movement. Other health insurers also saw gains, with Humana ending up 2.5% and Cigna up 4.7%.
According to Oliver Pursche, senior vice president and advisor for Wealthspire Advisors in Westport, Connecticut, “We’ve rallied significantly year to date, and that was in anticipation of better-than-expected earnings. What we’re seeing now and are likely to continue to see through the end of the summer is a little bit of fatigue and lack of conviction that stocks can go materially higher.”
The day’s quarterly reports unofficially marked the beginning of the second-quarter US earnings season. Analysts predict a decline of 8.1% in S&P 500 earnings for the quarter compared to a year ago, according to Refinitiv data. However, it is common for a majority of companies to exceed these expectations.
The Dow Jones Industrial Average rose by 113.89 points, or 0.33%, to reach 34,509.03. The S&P 500 experienced a slight decline of 4.62 points, or 0.10%, to 4,505.42, and the Nasdaq Composite dropped by 24.87 points, or 0.18%, to 14,113.70.
For the week, the Dow gained 2.3%, the S&P 500 rose 2.4%, and the Nasdaq advanced 3.3%. The S&P 500 has seen a 17% increase year to date.
In terms of other financial company reports, Citigroup shares fell by 4% after experiencing a significant decrease in quarterly profit, while BlackRock saw a decline in quarterly revenue, leading to a 1.5% decrease in its shares.
Some strategists believe that bank stocks may have sold off due to recent strong gains. Both the S&P banks index and KBW regional bank index snapped a five-session winning streak, with the latter experiencing a 1.9% dip on the day.
The high-profile tech-related shares index also saw a slight decline, following a record high close. Tesla, whose shares rose by 1.3%, is the first of the growth giants to report, with earnings expected on Wednesday.
Volume on US exchanges reached 10.72 billion shares, slightly lower than the 11.04 billion average for the full session over the last 20 trading days.
Declining issues outweighed advancing ones on the NYSE, with a ratio of 2.73-to-1, while on Nasdaq, the decliners had a ratio of 2.33-to-1.
During this period, the S&P 500 recorded 40 new 52-week highs and 4 new lows, while the Nasdaq Composite saw 97 new highs and 60 new lows. — Reuters
Credit: The Star : Business Feed
