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Below than expected earnings from fashion retailer Nordstrom and weak domestic data pushed benchmarks into the negative territory during Friday’s trading session. On the international front, Euro Zone’s trade surplus expanded for the month of June owing to higher exports and lower imports. Of the top ten S&P 500 industry groups, utilities stocks were the biggest losers. Industrial stocks were the only gainers.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) lost 0.2% to close the day at 15,081.47. The S&P 500 dropped 0.3% to finish Friday’s trading session at 1,655.83. The tech-laden Nasdaq Composite Index slipped 0.1% to end at 3,602.78. The fear-gauge CBOE Volatility Index (VIX) decreased 2.4% to settle at 14.37. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 4.8 billion shares, well below 2013’s average of 6.36 billion shares. Declining stocks outnumbered the advancers. For the 64% that declined, only 34% advanced.
The Dow Jones lost 2.2% for this week, posting its biggest weekly loss since June 2012. The S&P 500 and Nasdaq witnessed their worst week of losses since June 2013. The S&P 500 and Nasdaq have lost 2.1% and 1.6%, respectively. This week’s maximum losses are attributable to weaker than expected earnings from major retail companies, especially Wal-Mart. After Wal-Mart and Macy’s, another retail company, Nordstrom, reported revenues below the Street’s expectations. However, it posted better than expected earnings.
Shares of Nordstrom, Inc. (NYSE:JWN) dropped 4.9% after it reported earnings of $184 million and revenue of $3.19 billion. While earnings of the company were 18% higher than the previous year’s figures, revenues were just 6.3% high. Earnings of Nordstrom came in at $0.93 per share compared to the Street’s expectation of $0.88 a share. The company also reduced its full year earnings per share guidance within the range of $3.60 to $3.70 a share from the previous range of $3.65 to $3.80 per share.
According to the U.S. Department of Commerce, number of building permits approved in July increased 2.7% to 943,000 compared to June’s figure of 918,000. However, this came in below the consensus estimate of 952,000. Housing starts in July increased to 896,000, up 5.9% from June’s figure of 846,000. This also came in below the consensus estimate of 903,000. Another factor which dampened investor sentiment was the Thomson Reuters/University of Michigan's preliminary reading on consumer sentiment. The index came in 80.0 Compared to the consensus estimate of 84.9.
On the international front, trade surplus for the Euro Zone region expanded owing to increased exports and decrease in imports. Imports of the region dropped 6% year over year for June, the second straight decline in two months. Exports of the region dropped 3%, experiencing also a second consecutive decline. According to the Eurostat, inflation rate for July remained unchanged at 1.6%, below the European Central Bank’s target of 2%. Consumer prices slipped 0.5% for July. However, services and energy costs increased.
Utilities stocks were the major losers among the top ten S&P 500 industry groups. The Utilities SPDR (XLU) declined 1.2%. Stocks such as Duke Energy Corp (NYSE:DUK), the Southern Company (NYSE:SO), Dominion Resources, Inc. (NYSE:D), NextEra Energy, Inc. (NYSE:NEE) and NRG Energy Inc. (NYSE:NRG) dropped 1.3%, 1.2%, 0.8%, 1.0% and 1.0%.
Industrial stocks were the only gainers among the top ten S&P 500 industry groups. The Utilities SPDR (ETF) (XLU) gained 0.2%. Stocks such as United Technologies Corporation (NYSE:UTX), Union Pacific Corporation (NYSE:UNP), the Boeing Company (NYSE:BA), Honeywell International Inc. (NYSE:HON) and Emerson Electric Co. (NYSE:EMR) gained 0.1%, 0.7%, 0.7%, 0.4% and 0.6%, respectively.