Stocks Fall as Investors Parse Latest Batch of Earnings Reports

By Christopher Whittall and Amrith Ramkumar Features Dow Jones Newswires

The S&P 500 edged lower Friday, on pace for weekly gains as corporate earnings continued to drive some of the biggest moves.

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The Dow Jones Industrial Average fell 42 points, or 0.2%, to 21570. The S&P 500 and the Nasdaq Composite declined 0.1%. Both indexes were still on track to end the week higher and near records, though declines Friday would end the Nasdaq's 10-session winning streak. That's the tech-heavy index's longest such streak since February 2015.

Technology shares have notched fresh milestones this week, with the S&P 500's best-performing sector this year continuing to attract investors for its ability to increase earnings amid soft economic growth. On Wednesday, the information technology sector set a new all-time high for the first time in almost 20 years. Despite a 0.2% decline Friday, it still sits at levels not seen since the dot-com boom.

Microsoft shares slipped 1.1% Friday from their all-time high, despite posting a jump in profits after the market closed Thursday that beat analyst projections. Earlier in the week, shares of Netflix, which is classified as a consumer stock in the S&P 500 but often grouped with highflying technology firms, had their best day of the year after the streaming giant beat its subscriber-growth estimate. Facebook and Amazon.com have also flirted with share-price milestones this week ahead of upcoming earnings.

Earnings figures across sectors so far have generally been solid, said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas.

"The initial read here looks pretty favorable," Mr. Lefkowitz said. "There are always pockets of strengths and weakness within earnings season, but overall it's been more strength than weakness," he said.

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With U.S. stocks resting near records, many analysts and investors say robust corporate earnings and forecasts will need to continue to help push major indexes even higher.

On Friday, shares in General Electric declined 3.2%, placing it among the worst performers in the S&P 500, after the company reported a smaller-than-expected fall in earnings. Many analysts are skeptical that the industrial giant can meet its future financial targets.

Shares in eBay, meanwhile, fell 2.2% after the e-commerce company late Thursday reported earnings that were largely in line with Wall Street expectations.

Capital One and Cintas were among the S&P 500's best performers after beating earnings expectations. Shares of both companies gained about 8%.

Investors also kept a close eye on central bank meetings in Europe and Japan this week. Many investors expect global central banks to move slowly when withdrawing their monetary stimulus because of weak economic growth, providing favorable conditions for stocks and bonds.

"We have Goldilocks growth prospects with improving economic fundamentals, but inflation is missing in action. That allows central banks to go cautiously in terms of normalizing monetary policy," said Arnab Das, head of EMEA and emerging-market macro research at Invesco Fixed Income.

The yield on the 10-year U.S. Treasury note fell to 2.230%, according to Tradeweb, from 2.266% Thursday. Yields fall as prices rise. Utility shares, known as bond proxies because they pay relatively high dividends, were the best-performing S&P 500 sector on Friday and for the week.

European stocks were broadly lower, dragged down by a fall in auto and construction stocks. The Stoxx Europe 600 declined 1%.

Earlier, Japan's Nikkei Stock Average ended 0.2% lower and Hong Kong's Hang Seng Index fell 0.1%.

Write to Christopher Whittall at christopher.whittall@wsj.com

(END) Dow Jones Newswires

July 21, 2017 15:03 ET (19:03 GMT)