U.S. equities finished lower on Friday as investors focused on an intensifying flow of second-quarter earnings reports. In the end, the Dow Jones Industrial Average lost 0.2%, the S&P 500 Index lost a fraction, the Nasdaq Composite gave back 4 basis points and the Russell 2000 ended lower by 0.5%.
Elsewhere: Treasury bonds gained, the dollar extended its recent selloff to close in on 2015 lows and put its three-year consolidation range at risk; while gold gained 0.8% on the dollar’s weakness and crude oil lost 2.5%.
The dollar’s decline seems to be driven by some recent dovishness from the Federal Reserve (with Fed Governor Lael Brainard mentioning the dollar’s valuations repeatedly in a speech earlier this week), as well as growing expectations of quantitative easing tightening from the European Central Bank and the Bank of Japan.
Breadth was negative at 1.1 decliners for every advancer with volume at 98% of the New York Stock Exchange’s 30-day average. Utilities led the way on the drop in yields, up 0.8%. The energy sector laggard on the crude oil decline, down 0.9%.
In earnings news, Capital One Financial Corp. (NYSE:COF) gained 8.7% on a Q2 earnings and revenue beat and strong forward guidance. E*Trade Financial Corp (NASDAQ:ETFC) gained 5.1% on a top- and bottom-line beat on solid customer trading activity.
On the downside, General Electric Company (NYSE:GE) fell 2.9% despite a Q2 earnings beat, as the details were of low quality with industrial operating income missing estimates. Forward guidance was unchanged, although management shaded it lower on the earnings call on weaker legacy business activity.
Click to Enlarge On the macroeconomic front, the most notable development is the dollar’s decline. Should it accelerate, it could destabilize currency carry trades, fuel recent interest in crypto currencies like bitcoin, and bolster gold.
It could also put upward pressure on inflation via higher commodity and import prices.
Earnings activity is set to pick up as well, with the peak of the earnings season in the first week of August.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.