U.S. Stocks Reverse Gains Down the Stretch, Nasdaq Records Worst Week in Almost Two Months

The Dow and broader U.S. stock market declined on Friday, reversing a strong start to the session after a top Federal Reserve official poured cold water on expectations for deep interest-rate cuts in July.

Dow Falls; S&P 500, Nasdaq Follow

All three of Wall Street’s major indexes were down by the end of trading, with the Dow Jones Industrial Average falling 68.77 points, or 0.3%, to 27,154.20. The industrial index was up by as much as 120 points.

After a promising start, the Dow Jones Industrial Average reverses all of its gains on Friday. | Source: Stockcharts.com

The broad S&P 500 Index of large-cap stocks fell 0.6% to close at 2,976.61. Eight of 11 primary sectors contributed to the declines, with utilities, health care and communication services falling more than 1%. On the opposite side of the ledger, stocks tied to primary industries finished modestly higher.

The technology-laden Nasdaq Composite Index pared reported the worst percentage loss, falling 0.7% to 8,146.49. The Nasdaq fell more than 1% this week, its worst five-day stretch since late May.

Stocks came under pressure after Boston Fed President Eric Rosengren said he’s not on board with cutting interest rates later this month. In an interview with CNBC, Rosengren said the economy “is quite strong” and is not showing signs that aggressive rate cuts are needed.

Microsoft Earnings Surprise to the Upside

Shares of Microsoft hit record territory on Friday after the Redmond, Washington-based company reported much better than expected earnings and revenues for its fiscal fourth-quarter.

Much of that growth was tied to its thriving cloud business, whose revenues shot up 64% year-over-year to $11.39 billion. The intelligent cloud division now accounts for about one third of company-wide revenues.

Earnings jumped almost 50% to $13.19 billion, or $1.71 a share.

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” Satya Nadella, Microsoft’s CEO, said in Thursday’s earnings call.

Microsoft is currently the only U.S. company with a trillion-dollar valuation. The stock peaked at $140.22 on Friday before giving back most of its gains to settle up 0.2% at $136.62.

Consumer Sentiment Improves

U.S. consumer confidence improved in July, as more Americans gave a positive assessment of the future.

The University of Michigan’s consumer sentiment index for July came in at 98.4, improving slightly from June’s 98.2, preliminary data showed Friday. Consumers were slightly less optimistic about the current economic situation but improved their outlook on the future for a third consecutive month.

Sentiment indicators are seen as a proxy for consumer spending, which drives more than two-thirds of the U.S. economy. Retail sales, the most widely used gauge of consumer spending, has increased in each of the last four months.

The U.S. economy is coming off what many believe to be a disappointing quarter, with gross domestic product (GDP) expected to grow just 1.9% annually. The Commerce Department will release preliminary Q2 GDP data next Friday.

Featured image courtesy of Shutterstock. Chart via Stockcharts.com. 

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi