In this Nov. 23, 2020 file photo, a street sign is displayed at the New York Stock Exchange in New York. Stocks are opening lower on Wall Street Friday, July 30, 2021, putting the S&P 500 back in the red for the week. (AP Photo/Seth Wenig, File)
NEW YORK (AP) — U.S. stock indexes slipped on Friday, with much of the downward weight coming from a stumble for high-flying Amazon.
The S&P 500 was down 0.4%, as of 3:07 p.m. Eastern time. But it’s still on pace to wrap up its sixth straight month of gains, its longest such streak since 2018, and it remains within 0.5% of its record high set on Monday.
The Dow Jones Industrial Average was down 108 points, or 0.3%, at 34,975, and the Nasdaq composite was 0.6% lower.
Trading was mixed on Friday, with slightly more stocks in the S&P 500 falling than rising. Losses for energy producers and banks were offsetting modest gains for real-estate companies and health care stocks.
Amazon dropped 7.2% after it reported sales growth for its latest quarter that, while still enviable at 27%, wasn’t as strong as analysts expected. It also gave a forecast for revenue in the current quarter that fell short of Wall Street’s.
Because Amazon is one of the biggest companies in the S&P 500, its stock movements carry extra weight on the index. It alone accounted for nearly two-thirds of Friday's drop for the S&P 500.
Amazon was one of the biggest winners of the pandemic, which forced people to hunker down and shop from home. But people have begun returning to stores and other pre-pandemic activities, which has Amazon stock on pace for its worst day in more than a year.
Digital pinboard and shopping tool company Pinterest ran into a similar issue during its latest quarter. Its stock slumped 18.9% after it reported slower growth than expected for its number of users.
It's been a busy week for earnings reports from companies, and roughly three out of five in the S&P 500 have now detailed their performance for the spring, according to FactSet. Profits so far have been blowing past the already lofty expectations Wall Street had set.
Perhaps even more important is how companeis are doing it, said Sal Bruno, chief investment officer at IndexIQ.
“What's really encouraging is that the sales surprise is trending positive,” he said. “That tells me that companies are growing, which goes along with the economic reopening.”
So far, 88% of companies have reported even bigger sales for the latest quarter than analysts expected, according to FactSet. That's more than usual.
The strong earnings reports have helped to support the stock market, even as other worries have made trading a bit more unsteady recently. Concerns are rising about whether a new variant of the coronavirus may dent the economy, while a crackdown by Beijing on Chinese tech companies has helped unsettle investors around the world. High inflation also remains a risk hanging over the market.
Treasury yields were pulling lower following a spate of reports on the economy and inflation.
One showed that spending by consumers, which makes up the bulk of the economy, strengthened by more than economists expected in June. A key measure of inflation also accelerated to its fastest pace since 1991, but it wasn't quite as high as economists thought it would be.
Incomes unexpectedly rose for Americans in June, while their expectations for inflation were slightly lower than economists had forecast.
The yield on the 10-year Treasury fell to 1.23% from 1.27% late Thursday.
The market could be in for more choppy trading through August, Bruno said.
“The fundamental outlook is generally pretty strong going forward, even if there is some shorter term weakness and volatility," he said.7 Bellwether Stocks Signaling a Return to Normal
Bellwether stocks are considered to be leading indicators about the direction of the overall economy, a specific sector, or the broader market. They are predictive stocks in that investors can use the company’s earnings reports to gauge economic strength or weakness.
The traditional definition of bellwether stocks brings to mind established, blue-chip companies. They are the home of mature brands with consumer loyalty. These may be stocks that aren’t associated with exceptional growth; some may be dividend stocks.
But there’s something different about normal this time around. If it’s true (and I think it is) that the old rules no longer apply, investors need to change the way they think about bellwether stocks. Plus, let’s face it, many stocks that we might consider to be bellwether stocks have already had a bit of a vaccine rally. That means that the easy gains are gone.
With that in mind, we’ve put together this special presentation that highlights seven of what may be termed the new bellwether stocks. These are stocks that investors should be paying attention to as the economy continues to reopen.
One quality of many of these stocks is that they are either negative for 2021 or underperforming the broader market. And that means that they are likely to have a strong upside as the economy grows.
View the "7 Bellwether Stocks Signaling a Return to Normal"