U.S. Stocks Turn Lower After Seeing Initial Strength
(RTTNews) - After moving to the upside at the open, stocks have turned lower over the course of morning trading on Friday. The major averages have pulled back well off their initial highs and into negative territory.
Currently, the major averages are posting moderate losses. The Dow is down 106.95 points or 0.4 percent at 26,627.76, the Nasdaq is down 52.19 points or 0.5 percent at 10,421.64 and the S&P 500 is down 7.98 points or 0.3 percent at 3,207.59.
The downturn on Wall Street partly reflects the release of a report from the University of Michigan showing an unexpected deterioration in U.S. consumer sentiment in the month of July.
The preliminary report said the consumer sentiment index tumbled to 73.2 in July after jumping to 78.1 in June. The pullback surprised economists, who had expected the index to inch up to 79.0.
With the unexpected decrease, Surveys of Consumers chief economist Richard Curtin noted the index is "insignificantly" above the nearly nine-year low set in April.
"Following the steepest two-month decline on record, it is not surprising that consumers need some time to reassess the likely economic impact from the coronavirus on their personal finances and on the overall economy," Curtin said.
He added, "Unfortunately, declines are more likely in the months ahead as the coronavirus spreads and causes continued economic harm, social disruptions, and permanent scarring."
The data, which comes following another record spike in new coronavirus cases in the U.S., seems to have dented traders' unrelenting optimism about a V-shaped economic recovery.
The disappointing reading on consumer sentiment has overshadowed a separate report from the Commerce Department showing a substantial increase in new residential construction in the month of June.
A steep drop by shares of Netflix (NFLX) is also weighing on the markets, with the video streaming giant plunging by 7.8 percent.
The sell-off by Netflix comes after the company reported second quarter earnings that missed analyst estimates and forecast weaker than expected subscriber growth.
Airline stocks are extending the sharp pullback seen in the previous session, dragging the NYSE Arca Airline Index down by 1.3 percent.
Considerable weakness has also emerged among banking and retail stocks, with the KBW Bank Index and the Dow Jones U.S. Retail Index falling by 1.2 percent and 1.1 percent, respectively.
On the other hand, gold stocks have shown a strong move to the upside on the day, driving the NYSE Arca Gold Bugs Index up by 1.8 percent.
The strength among gold stocks comes amid an increase by the price of the precious metal, as gold for August delivery is climbing $7.40 to $1,807.70 an ounce.
Housing and networking stocks are also seeing notable strength in morning trading, limiting the downside for the broader markets.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Friday, but Japan's Nikkei 225 Index bucked the uptrend and slipped by 0.3 percent. China's Shanghai Composite Index inched up by 0.1 percent, while Australia's S&P/ASX 200 Index rose by 0.4 percent.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the French CAC 40 Index has fallen by 0.5 percent, the German DAX Index is up by 0.3 percent and the U.K.'s FTSE 100 Index is up by 0.6 percent.
In the bond market, treasuries have shown a lack of direction over the course of the morning. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point at 0.618 percent.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.