U.S. stocks closed lower Friday following disappointing results from Twitter Inc. and bellwethers, including Exxon and Intel. The highly-anticipated release of gross domestic product data also showed that economic growth remains relatively strong but came in a shade below lofty expectations.
How did the main benchmarks fare?
The Dow Jones Industrial Average DJIA, -0.30% slid 76.01 points, or 0.3%, to 25,451.06. The S&P 500 index SPX, -0.66% shed 18.62 points, or 0.7%, to 2,818.82 with seven of its 11 sectors lower as the technology sector sank 2%. The Nasdaq Composite Index COMP, -1.46% fell 114.77 points, or 1.5%, to 7,737.42.
For the week, the Dow added 1.6%, the S&P 500 rose 0.6%, and the Nasdaq fell 1.1%. Both the Dow and the S&P posted their fourth straight weekly gains, the longest such streak since January.
What drove the markets?
Consumers and government spending powered the economy to a 4.1% rate of gross domestic product growth in the second quarter, the fastest pace of growth in almost four years, although it was slightly below the 4.2% rate predicted, on average, by economists surveyed by MarketWatch.
President Donald Trump called the report “amazing” and “very sustainable.” Economists, on the other hand, said this pace of expansion wasn’t likely to last.
Separately, consumer sentiment fell to a six-month low in July, the University of Michigan said, but came inslightly better than expected.
In a bright spot for company news, Amazon.comInc. AMZN, +0.51% gained 0.5% after the e-commerce company posted not only its biggest quarterly profit in history, but earnings that were double what was expected. The company extended its strong year-to-date rally and hit new records. It is up 55% thus far in 2018, playing a key role in boosting the market.
Amazon’s results could soothe concerns about the state of the FAANG trade. That refers to five large-capitalization internet and technology stocks—Facebook, Apple, Amazon, Netflix, and Google’s parent Alphabet—that have supported the market for years. While Alphabet reported strong results, Netflix disappointed earlier this season. Facebook revealed slowing user growth and weak guidance, sparking its biggest one-day percentage drop ever on Thursday, a collapse that wiped out about $120 billion in market value.
On the political front, Michael Cohen, Trump’s former personal attorney, said Trump knew in advance about a summer 2016 meeting at Trump Tower between top campaign staffers, including his son, Donald Trump Jr., and Russians said to be offering damaging information on Hillary Clinton, according to a CNN report late Thursday.
What were analysts saying?
“A strong GDP number—and 4.1% is still a good number, even if it was a bit below consensus—will signal that the Fed can continue with its plan for rate increases. That will be top of mind for investors today,” said Chad Oviatt, director of investment management for Huntington Private Bank.
“We remain fairly constructive about equities. Generally speaking there’s a lot of confidence about earnings growth, and the number of firms that are meeting or beating expectations, even in light of names like Facebook,” he said.
Which other stocks were in focus?
Exxon Mobil Corp. XOM, -2.75% fell 2.8% after reporting second-quarter earnings and revenue that missed expectations. Chevron Corp. CVX, +1.63% also came in below forecasts, but its shares shook off an initial decline to rise 1.6%. Both stocks are Dow components.
Also weighing on the Dow was Intel Corp. INTC, -8.59% which sank 8.6% after the chip giant’s earnings, revenue and upbeat outlook surpassed Wall Street forecasts late Thursday, but quarterly revenue growth for its best-growing segment fell short of expectations.
CBS Corp. CBS, -6.12% shares dropped 6.1% on reports that the New Yorker will publish an article on sexual-misconduct allegations against Chief Executive Leslie Moonves. The article reportedly discusses instances of unwanted kissing and touching over two decades ago.
Merck & Co. Inc. MRK, -0.81% fell 0.8% after it reported its results and gave an outlook.
Twitter Inc. TWTR, -20.54% tumbled 21% after it reported its second-quarter results and gave a third-quarter outlook that was below forecasts. The Global X Social Media ETF SOCL, -4.14% fell 4.1%.
Facebook Inc. FB, -0.78% extended losses after having its worst day on Thursday to fall 0.8% in the wake of its subdued outlook. However, Heather Bellini, analyst at Goldman Sachs, maintained a buy rating on the stock and cut her 12-month price target to $205 from $225.
Colgate-Palmolive CL, -0.42% reported adjusted second-quarter earnings that met expectations but sales that were below forecasts. Shares fell 0.4%.
Electronic Arts Inc. EA, -5.70% shares fell 5.7% after the videogame maker issued an earnings beat late Thursday but fell short of Wall Street targets for coming quarters.
Shares of Chipotle Mexican Grill Inc. CMG, +5.72% rallied 5.7% after the burrito chain posted better-than-expected results after the close Thursday.
BP PLC BP, -0.04% will buy the bulk of BHP Billiton Ltd.’s BHP, +1.42% U.S. onshore oil-and-gas unit for $10.5 billion. U.S.-listed shares of BP was flat while BHP rose 1.4% on the New York Stock Exchange.
Starbucks Corp. SBUX, +1.36% SBUX, +1.36% climbed 1.4% after the coffee company produced results late Thursday that largely met Wall Street’s expectations.
What were other markets doing?
European stocks SXXP, +0.40% ended mostly higher, while Asian markets rose with the exception of China. Gold futures GCQ8, -0.29% settled marginally lower to notch a third straight weekly slide, and oil futures CLU8, -0.82% fell 1% to $68.94 a barrel. The ICE U.S. Dollar Index DXY, -0.11% dipped 0.1%.