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Stocks end Friday’s session lower, but S&P 500 still closes out sixth straight monthly advance in July

Stocks fell Friday as investors took in a batch of some weaker-than-expected earnings results from heavily weighted companies including Amazon. However, the major indexes still closed out the month of July higher, boosted by a wave of other stronger-than-expected earnings results earlier this month and signals that monetary policymakers would keep current supports in place.

The S&P 500 closed out the session lower by 0.5%, but still logged a gain of more than 2% for the month of July. The index is also still up about 17% for the year-to-date, and has risen for six consecutive months.

Both the Dow and Nasdaq also closed out July higher by more than 1% each.

Investors have been digesting a largely stronger-than-expected second-quarter earnings season and solid economic data. On Thursday, traders received a second-quarter U.S. GDP report that missed lofty economists’ expectations. But traders appeared to take the print as a sign bolstering the Federal Reserve’s case to keep current accommodative monetary policies in place during the recovery. Second-quarter GDP came in at 6.5%, or below consensus estimates for 8.4% annualized growth.

“The economic data [Thursday] was not bad. It was in between that not too good, not too hot in order to bring the Fed to the table,” Megan Horneman, director of portfolio strategy at Verdence Capital Advisors, told Yahoo Finance. “But when you look at it, with over 6% economic growth, that’s fantastic. That’s a very good number.”

Many economists are expecting to see a slowdown in the pace of expansion in the economy in the second half of this year, with the peak effects of crisis-era monetary and fiscal policies and an early surge of consumer demand starting to wane. For corporate earnings, however, the second-half headwinds could be more pronounced, with the impacts of inflation and supply chain issues still at play.

“There’s just going to be a little bit of uncertainty from all of the earnings reports because in the second half of this year … the companies will still be fighting some of those after-effects from the pandemic, like inflation, like supply chain disruptions,” Horneman said. “That’s going to continue.”

Some major companies have pointed to some of these concerns for the second half of the year. Amazon (AMZN) became the latest mega-cap technology company to post disappointing guidance Thursday evening, with a pandemic-fueled surge in e-commerce set to fade and drag on revenue growth. The company said it sees current-quarter net sales coming in at as much as $112 billion, missing estimates for $118.7 billion. Shares fell more than 6% in early trading.

The forecast echoed comments around an impending deceleration in sales growth at Facebook (FB). These results appeared to vindicate many traders’ concerns that the pandemic-era winners of last year would ultimately be unable to sustain such heightened growth rates as the recovery matured.

Still, however, the vast majority of companies have at least posted second-quarter earnings results that topped estimates. These results, in tandem with ongoing support from monetary policymakers, have helped fuel the market to record levels. The S&P 500 hit a record intraday high on Thursday and pulled back only marginally from these levels as of Friday.

4:08 p.m. ET: Stocks end Friday lower, but post monthly gains

Here’s where markets settled on Friday:

  • S&P 500 (^GSPC): -23.89 (-0.54%) to 4,395.26

  • Dow (^DJI): -149.06 (-0.42%) to 34,935.47

  • Nasdaq (^IXIC): -105.59 (-0.71%) to 14,672.68

2:50 p.m. ET: So far, 88% of S&P 500 have topped Q2 earnings estimates: FactSet

As earnings season continues to chug along, an increasing number of companies have topped Wall Street’s profit expectations. As of Friday, 88% of S&P 500 companies topped consensus earnings per share estimates, according to FactSet data. If this proportion holds, it would be the highest on record in data extending back to 2008.

The blended earnings growth rate for the blue-chip index, which includes both actual results and company estimates, is at 85.1% for the second quarter. This, if realized by the end of earnings season, would be the highest since the fourth quarter of 2009. 

9:31 a.m. ET: Stocks open in the red, Nasdaq drops as Amazon shares hold lower 

Here were the main moves in markets shortly after the opening bell:

  • S&P 500 (^GSPC): -26.07 (-0.59%) to 4,393.08

  • Dow (^DJI): -53.47 (-0.15%) to 35,031.06

  • Nasdaq (^IXIC): -132.96 (-0.91%) to 14,643.46

  • Crude (CL=F): +$0.09 (+0.12%) to $73.71 a barrel

  • Gold (GC=F): -$7.20 (-0.39%) to $1,828.60 per ounce

  • 10-year Treasury (^TNX): -2.3 bps to yield 1.246%

8:45 a.m. ET: Core PCE inflation accelerated in June over last year as inflationary pressures ramped 

Core personal consumption expenditures (PCE) grew at a faster year-on-year rate in June than in May, reflecting ongoing upward price pressures as demand surges during the recovery. The Bureau of Economic Analysis reported that core PCE grew 3.5% in June over last year, topping May’s 3.4% rate. Still, however, this was less hot than the 3.7% pace consensus economists were looking for, according to Bloomberg data.

And on a monthly basis, core PCE decelerated, rise 0.4% compared to May’s 0.5% month-on-month rise. Core PCE, which strips out volatile food and energy prices, serves as the Federal Reserve’s preferred inflation gauge. 

8:39 a.m. ET: Personal income, spending rose more than expected in June while personal savings rate falls to lowest since start of pandemic

Personal income unexpectedly rose in June after dipping in May, as many employers increased bonuses and compensation to incentivize workers back into the labor market at the start of the summer. The move more than offset a modest deceleration in government stimulus-related income. 

Personal income rose 0.1% in June month-on-month, according to the Bureau of Economic Analysis’ monthly report. Consensus economists were looking for a 0.3% monthly decline, according to Bloomberg data. In May, personal income fell 2.2%. 

“The estimate for June personal income and outlays reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic,” according to the BEA. “Government social benefits associated with pandemic-related assistance programs declined in June.” 

Personal spending also rose more than expected, increasing 1.0% month-on-month versus the 0.7% estimate. The personal saving rate, or savings as a percentage of disposable income, fell to the lowest level since February 2020. This came in at 9.4% from May’s 10.3%, likely reflecting a release of pent-up consumer demand from during the pandemic. 

7:31 a.m. ET: Chevron swings back to Q2 profit, announces return of buybacks 

Chevron (CVX) delivered a stronger-than-expected second-quarter profit, with a rise in oil and energy prices so far for the year-to-date helping boost the company’s results. Shares of the oil major rose 2% in pre-market trading.

Second-quarter adjusted earnings per share totaled $1.71, topping estimates for $1.60, according to Bloomberg data. This also reversed a loss of $1.56 per share in the same quarter of 2020. Chevron’s upstream oil exploration business fueled the bottom-line beat, with the unit delivering earnings of $3.2 billion to recover after a loss of $6.1 billion in the second quarter of last year. Downstream earnings of $839 million topped Wall Street’s estimates for $489 million.

The company also said it expects to resume share buybacks in the current quarter at a rate of $2 billion to $3 billion per year. 

“Second quarter earnings were strong, reflecting improved market conditions, combined with transformation benefits and merger synergies,” Mike Wirth, Chevron’s chairman and chief executive officer, said in a press statement. “Our free cash flow was the highest in two years due to solid operational and financial performance and lower capital spending.”

7:16 a.m. ET Friday: Stock futures fall, Nasdaq set to underperform

Here’s where markets were trading ahead of the opening bell Friday morning 

  • S&P 500 futures (ES=F): -24.75 points (-0.56%) at 4,387.00

  • Dow futures (YM=F): -78 points (-0.22%) to 34,896.00

  • Nasdaq futures (NQ=F): -146.5 points (-0.97%) to 14,891.25

  • Crude (CL=F): -$0.17 (-0.23%) to $73.43 a barrel

  • Gold (GC=F): -$3.50 (-0.19%) to $1,832.30 per ounce

  • 10-year Treasury (^TNX): -2 bps to yield 1.249%

6:00 p.m. ET Thursday: Nasdaq futures dip as Amazon weighs

Here were the main moves in markets as the overnight session kicked off: 

  • S&P 500 futures (ES=F): -14 points (-0.32%) at 4,397.75

  • Dow futures (YM=F): +18 points (+0.05%) to 34,992.00

  • Nasdaq futures (NQ=F): -118.75 points (-0.79%) to 14,919.00

Traders work on the floor at the New York Stock Exchange in New York, on July 29, 2021. – Wall Street stocks climbed early July 29 following another round of mostly strong earnings and US data that showed strong second-quarter growth that lagged expectations. (Photo by TIMOTHY A. CLARY / AFP) (Photo by TIMOTHY A. CLARY/AFP via Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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