Stocks Pressured After Reaching Record Territory; Poised For Weekly Gains

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Stocks reversed course and traded lower Friday as investors' interest in equities cooled after five straight days of gains which had pushed the Dow industrials and S&P 500 to record levels.

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A terrorist attack in Nice, France that has left more than 80 people dead and scores injured has contributed to dampening demand for equities amid upbeat retail sales and inflation numbers as well as stronger-than-expected earnings reports.

The S&P 500 index was down 7 points, or 0.4%, to 2,156. The Dow Jones Industrial Average was off 29 points, or 0.2%, to 18,477. A 0.7% decline in financials and 0.5% drop in consumer-discretionary stocks underpinned the slip

Meanwhile, the Nasdaq Composite Index shed 14 points, or 0.3%, to 5,020.

Still, the weekly climb in stocks puts the main indexes on track to post their third consecutive weekly advance.

"We have had a really really good week, and the market is getting tired," said Mark Kepner, managing director of sales and trading at Themis Trading. "But bonds sold off a fair amount and the rally in stocks seems a bit long in the tooth. A pullback from here would not be surprising."

The 10-year Treasury note yield rose 4 basis points to 1.57% on Friday, having recovered more than 20 basis points since hitting a record low 1.33% a week ago.

Frank Cappelleri, executive director at Instinet LLC, however suggested that there is more upside potential for the market, noting that in the 20 previous incidences where the S&P 500 climbed for five sessions in a row, it extended gains 80% of the time by an average of 1.55% 20 days later.

"Recent history shows that the probability of higher prices is in the bulls' favor," Cappelleri said in a note.

European equity markets were down in the aftermath of Thursday night's terror attack, when a truck barreled through Bastille Day revelers, who were gathered at the Promenade des Anglais in the Riviera city.

French President François Hollande said the scene had "undeniable traits of terrorism," and he extended the country's state of emergency that has been in place since the Paris terrorist attacks in November.

In Asia, Chinese growth data showed the country's gross domestic product grew 6.7% in the second quarter, beating forecasts of a 6.6% reading. The world's second-largest economy expanded by 6.7% in the first quarter.

U.S. economic news:Consumer prices rose 0.2% in June -- the fourth straight monthly increase--as the cost of gasoline, rent and medical care continued to go up, according to a government index that tracks the cost of living.

Sales at U.S. retailers rose 0.6% in June, led by a surge in spending at home-and-garden centers and online stores, the government said Friday.

Meanwhile, a reading of New York-area manufacturing conditions retreated in July, and analysts said it could be the first sign of the impact of the Brexit vote on the U.S. economy.

Business inventories rose in May, while University of Michigan consumer sentiment fell to 89.5 in July.

Among Federal Reserve speakers, St. Louis Fed President James Bullard and Minneapolis Fed President Neel Kashkari will discuss the issue of too-big-to-fail banks at the Official Monetary and Financial Institutions forum at 1:15 p.m. Eastern.

Earnings:Citigroup Inc.(C) fell 1.1% after the bank reported second-quarter results that beat estimates.

Wells Fargo & Co.(WFC) posted a drop in second-quarter profit, but the results were in line with expectations, disappointing investors. Shares sank 3%.

PNC Financial Services Group Inc. (PNC) reported a decline in revenue and profit for the second quarter. The stock was off 1.1%.

U.S. Bancorp(USB) rose 0.6% after reporting a rise in profit as both loans and deposits rose.

Movers and shakers:Delta Air Lines Inc. (DAL), American Airlines Group Inc.(AAL), United Continental Holdings Inc.(UAL) and Southwest Airlines Co.(LUV) were getting hit in the terror aftermath, as concerns rose the attacks could further deter people from traveling.

Other markets:Asia stocks closed higher, with Japan's Nikkei 225 index getting a boost from messaging-app operator Line that surged at much as 48%.

European stocks were weak following the terror attack in Nice.

Oil prices were higher, while gold inched lower. The dollar gained against most major currencies, as well as against the yen.

--Sara Sjolin contributed to this article.

By Sue Chang and Anora Mahmudova, MarketWatch

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