MARKET OUTLOOK
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U.S. stocks fell on Friday amid a slide in Amazon shares,
but the S&P 500 is still on track to notch its sixth straight positive month.
The S&P 500 fell 0.4%, dragged down by the consumer discretionary sector.
The tech-heavy Nasdaq Composite slipped 0.6%.
The Dow Jones Industrial Average dipped 108 points.
Amazon sank 7.3% after it reported its first quarterly revenue miss in three years and
gave weaker guidance. Pinterest fell even further, down 17%, after saying it lost monthly users
during the three months ended June 30.
Major averages are still on pace to wrap up a solid month, although volatility has picked up amid
concerns about the economic recovery in the face of the spreading delta variant.
The Nasdaq and Dow have added 1% and 1.4% respectively in July, while the broad
S&P 500 is up 2.2% over the same period. Utilities, health-care, real estate and technology
stocks have led the S&P 500 higher for the month, while energy and financials have lagged.
“There has been quite a bit of volatility and price choppiness in the market in recent weeks,
” Brian Belski, chief investment strategist at BMO, said in a note. “Increased concerns over
the delta variant and its potential implications for reopening momentum seemed to play a
key role in the price action, while peak themes related to economic growth, earnings, and
policy support also remained an overhang on risk sentiment.”
Investors digested a key inflation indicator that showed better-than-feared price pressures on
Friday. The core personal consumption expenditures price index rose 3.5% in June year over
year. It marked a sharp acceleration in inflation but came in slightly below a Dow Jones expectation
of a 3.6% jump.
Weaker-than-expected readings on the U.S. economy further eased concerns about the Federal
Reserve dialing back asset purchases.
U.S. second-quarter gross domestic product accelerated 6.5% on an annualized basis,
considerably
less than the 8.4% Dow Jones estimate. Meanwhile, the latest weekly jobless claims also came in
higher than expected.
Fed Chairman Jerome Powell on Wednesday noted that while the economy has come a long way
since the Covid-19 recession, it still has a ways to go before the central bank considers adjusting
its easy-money policies.
Procter & Gamble shares rose 2% after the consumer giant topped analysts’ estimates for quarterly
earnings and revenue. However, the company warned that increasing commodity costs could hit its
earnings in the upcoming year.
Shares of online brokerage Robinhood rebounded 4% in volatile trading on Friday after closing its
debut session 8% lower.
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