Stocks Close Firmly In The Red On Disappointing Earnings News - U.S. Commentary

(RTTNews) - Stocks came under pressure in early trading on Friday and remained firmly in the red throughout the remainder of the trading session. With the losses on the day, the S&P 500 pulled back well off yesterday's record closing high.

The major averages moved roughly sideways throughout the afternoon, stuck in negative territory. The Dow slid 123.23 points or 0.7 percent to 16,960.57, the Nasdaq fell 22.54 points or 0.5 percent to 4,449.56 and the S&P 500 dropped 9.64 points or 0.5 percent to 1,978.34.

For the week, the major averages turned in a mixed performance. While the Dow fell by 0.8 percent, the Nasdaq rose by 0.4 percent and the S&P 500 inched slightly higher.

A negative reaction to the latest batch of earnings news contributed to the weakness on Wall Street on Friday, with shares of Amazon (AMZN) tumbling by 9.7 percent on the day.

The steep loss by Amazon came after the online retailer reported a wider than expected second quarter loss after the close of trading on Thursday.

Credit card giant Visa (V) also came under pressure after reporting better than expected third quarter earnings but lowering its full-year revenue guidance.

Pandora (P) and Swift Transportation (SWFT) also moved notably lower after reporting their quarterly results, while shares of Baidu (BIDU) showed a strong move to the upside.

Geopolitical concerns also continued to weigh on the markets, as traders kept a close eye on the ongoing conflicts in Ukraine and Gaza.

News of Ukrainian Prime Minister Arseniy Yatsenyuk's resignation added to worries about the situation in Ukraine, while the Palestinian death toll in Gaza has reportedly topped 800.

Traders also seemed to be moving their money into less risky assets ahead of several potentially market moving events next week.

The Federal Reserve is scheduled to announce it latest monetary policy decision next Wednesday, while the Labor Department is due to release its closely watched monthly jobs report next Friday.

Meanwhile, traders largely shrugged off a report from the Commerce Department showing a bigger than expected rebound in durable goods orders in the month of June.

Sector News

Adding to steep losses posted in the two previous sessions, semiconductor stocks moved sharply lower on the day. The Philadelphia Semiconductor Index tumbled by 2 percent, hitting its lowest closing level in well over a month.

Maxim Integrated (MXIM) helped lead the semiconductor sector lower after reporting weaker than expected fourth quarter results and providing disappointing guidance.

Retail stocks also saw significant weakness, dragging the Dow Jones Retail Index down by 1.5 percent. The disappointing earnings news from Amazon likely weighed on the sector.

Considerable weakness was also visible among natural gas stocks, as reflected by the 1.3 percent loss posted by the NYSE Arca Natural Gas Index. Noble (NBL) posted a notable loss, falling by 2.9 percent to a two-month closing low.

Meanwhile, gold stocks bucked the downtrend by the broader markets amid an increase by the price of the precious metal. With gold for August delivery climbing $12.50 to $1,303.30 an ounce, the NYSE Arca Gold Bugs Index jumped by 2.7 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan's Nikkei 225 Index surged up by 1.1 percent, while India's BSE Sensex dropped by 0.6 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.4 percent, the German DAX Index and the French CAC 40 Index tumbled by 1.5 percent and 1.8 percent, respectively.

In the bond market, treasuries regained some ground after ending the previous session notably lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.469 percent.

Looking Ahead

As mentioned above, next week's trading could be impacted by a number of scheduled events as well as any unforeseen developments overseas.

Along with the Fed announcement and jobs report, traders are also likely to keep an eye on reports on second quarter GDP, manufacturing activity, consumer confidence, and personal income and spending.

On the earnings front, Exxon Mobil (XOM), American Express (AXP), Twitter (TWTR), Merck (MRK), Pfizer (PFE), UPS (UPS), and Procter & Gamble (PG) are among the big-name companies due to report their quarterly results next week.