Stocks were mixed Friday, though all three major indices remained on track to end the week higher.
The session on the heels of a drop on Thursday, with the Dow ending a four-day winning streak, after new data showed a greater than expected number of new jobless claims were filed last week. New data Friday morning showed an ongoing improvement in the housing market, with both building permits and housing starts rising in June over May.
However, a separate report Friday morning unexpectedly showed a drop in consumer sentiment in the first part of July, as a resurgence in coronavirus cases in some parts of the country triggered a retreat in consumer optimism over the pace of economic recovery.
Over the past week, a rotation out of tech stocks and other high-growth shares that had led the market’s rally from March lows was under way. Shares of each of Facebook, Amazon, Microsoft and Apple were little changed Friday morning, steadying after steep run-ups over the past several months.
Peer tech giant Netflix (NFLX) saw its stock slump in early trading after delivering a weak outlook for the current quarter, suggesting the streaming company’s incredible surge of new users would slow in the second half of the year. Netflix expects to add 2.5 million new users in the third quarter – half as many as consensus analysts anticipated. Still, the company’s 10 million new users in the second quarter were better than the 8.3 million expected.
Before market open, BlackRock reported quarterly profit and revenue that topped consensus expectations, though long-term inflows of $62.2 billion were short of consensus estimates for $78.6 billion. While down sharply from the $125 billion in inflows in the same period last year, the result as an improvement over last quarter, when BlackRock saw net outflows for the first time in five years as investors stayed on the sidelines as the pandemic spread.
2:35 p.m. ET: Crude oil slips as economic fears weigh on energy prices
US West Texas intermediate crude oil prices (CL=F) settled lower by 16 cents, or 0.4%, to $40.59 per barrel on Friday. The decline marked a back to back session of declines for the commodity, which has risen 3% for July to date, but struggled to push above the $40 per barrel level as economic concerns around the coronavirus pandemic linger.
10:11 a.m. ET: Consumer sentiment unexpectedly fell in July, signaling ‘another aggressive fiscal response is urgently needed’: U. Michigan
Consumer sentiment unexpectedly fell in July over June as a resurgence in coronavirus cases weighed on Americans’ outlooks for the economy, according to the closely watched University of Michigan Surveys of Consumers’ preliminary monthly report.
The index of consumer sentiment fell to 73.2 in July from 78.1 in June, whereas a rise to 79.0 had been expected. Indices capturing consumers’ assessments of current conditions and future expectations each fell short of consensus estimates, with the latter declining sharply to 66.2 when a rise to 74.0 had been expected.
“Consumer sentiment retreated in the first half of July due to the widespread resurgence of the coronavirus. The promising gain recorded in June was reversed, leaving the Sentiment Index in early July insignificantly above the April low (+1.4 points),” Richard Curtin, chief economist for the Surveys of Consumers, said in a statement. “Unfortunately, declines are more likely in the months ahead as the coronavirus spreads and causes continued economic harm, social disruptions, and permanent scarring.”
“Another aggressive fiscal response is urgently needed that focuses on financial relief for households as well as state and local governments,” Curtin added. “Without action, another plunge in confidence and a longer recession is likely to occur.”
9:53 a.m. ET: Housing starts data shows US ‘still short of the best economy in 50 years’ from before the pandemic
This morning, the Commerce Department’s housing report underscored a continued, albeit slowing, recovery in the US housing market, based on housing starts and building permits data.
Still, the pace of recovery could be jeopardized in coming months as some states grapple with a resurgence in coronavirus cases, which took off in the middle of June and remains ongoing.
Here’s what Chris Rupkey, chief financial economist, for MUFG Union Bank, had to say:
Net, net, the recovery in residential housing construction is still short of the best economy in 50 years at the start of 2020. All signs were flashing green at the beginning of June for residential housing construction with the states reopening and mortgage rates to finance home purchases at record lows.
But now there are storm clouds on the horizon for the housing recovery with the second wave of the coronavirus pandemic shutting some areas of the country back down and the fiscal stimulus from Washington coming to a halt for millions of Americans which may cool the outlook for construction on the part of home builders and bring about new caution on the part of home buyers.
Residential housing construction is off the lows, but it looks like a full return to the stronger levels of activity earlier this year before the pandemic lockdown of the economy in March is going to be delayed as new social distancing measures will keep new home buyers on the sidelines for now.
9:33 a.m. ET: Stocks open slightly higher
Here were the main moves in markets as of 9:33 a.m. ET:
S&P 500 (^GSPC): +5.77 points (+0.18%) to 3,221.34
Dow (^DJI): +10.5 points (+0.04%) to 26,745.21
Nasdaq (^IXIC): +31.27 points (+0.33%) to 10,512.44
Crude (CL=F): +$0.11 (+0.27%) to $40.86 a barrel
Gold (GC=F): +$11.00 (+0.61%) to $1,811.30 per ounce
10-year Treasury (^TNX): +0.1 bps to yield 0.613%
8:30 a.m. ET: Housing starts, building permits rise in June
New home-building rose by a slightly smaller than expected margin in June, but continued to improve on a month over month basis as housing recovered from the depths of the pandemic and business closures.
Housing starts rose 17.3% on a seasonally adjusted annualized basis to 1.186 million, just short of the 1.19 million expected, based on Bloomberg estimates. May’s housing starts were upwardly revised to 1.011 million from the 974,000 previously reported, with the revision reflecting a more than 8% month on month gain.
Building permits, a proxy for future home-building, also rose less than expected. These increased 2.1% over May to 1.241 million, whereas 1.293 million had been expected. Permits for May were modestly downwardly revised to 1.216 million, from the 1.22 million previously reported.
7:17 a.m. ET: Stock futures look to end the week on a high note
Here were the main moves in markets, as of 7:17 a.m. ET:
S&P 500 futures (ES=F): 3,206.75, up 12.25 points or 0.38%
Dow futures (YM=F): 26,618.00, up 65 points, or 0.24%
Nasdaq futures (NQ=F): 10,608.00, up 96.25 points, or 0.92%
Crude (CL=F): -$0.24 (-0.59%) to $40.51 a barrel
Gold (GC=F): +$5.50 (+0.31%) to $1,805.80 per ounce
10-year Treasury (^TNX): -1 bp to yield 0.602%
6:05 p.m. ET Thursday: Stock futures tick higher in late trading
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:05 p.m. ET:
S&P 500 futures (ES=F): 3,195.75, up 1.25 points or 0.04%
Dow futures (YM=F): 26,559.00, up 6 points, or 0.02%
Nasdaq futures (NQ=F): 10,528.00, up 16.25 points, or 0.15%
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