The stock market closed lower Friday, ending a three-week win streak for the major indexes and adding some warning signs for investors.
XThe Nasdaq fell 0.8% and stretched its losing streak to four days. The composite closed slightly below its 21-day exponential moving average. That removes a short-term level of support.
Indexes closed near session lows. The S&P 500 lost 0.8% also and the Dow Jones Industrial Average fell 0.9%. The Russell 2000 slid 1.3%.
For the week, the Nasdaq lost nearly 2%, the S&P 500 1% and the Dow 0.5%. Volume fell Friday on the Nasdaq and NYSE also, according to early figures.
Retail stocks fell, despite a better-than-expected June retail sales report. The Commerce Department said sales climbed 0.6%, much better than economist forecasts for a 0.4% decline from the previous month. More stores are back to full operating hours as Covid-19 restrictions are eased, and many chains have raised prices.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 34686.93 | -300.09 | -0.86 |
| S&P 500 | (0S&P5) | 4327.09 | -32.94 | -0.76 |
| Nasdaq | (0NDQC ) | 14427.24 | -115.89 | -0.80 |
| Russell 2000 | (IWM) | 214.94 | -2.69 | -1.24 |
| IBD 50 | (FFTY) | 42.05 | -0.31 | -0.73 |
Last Update: 4:04 PM ET 7/16/2021 |
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Yet, the SPDR Retail S&P ETF (XRT) fell 1.5% and traded below the 50-day moving average for a second straight day.
Defensive Sectors Lead Stock Market
Friday's trading showed a defensive bias, with utilities, real estate, health care and consumer staples posting gains of 0.2% to 1%.
Energy Select Sector SPDR ETF (XLE) was the poorest-performing S&P sector ETF, down 2.8%. The ETF is now 15% below its June 10 peak after dropping about 8% this week.
The price of U.S. crude was nearly flat at $71.56 a barrel but suffered its worst week since March. The United Arab Emirates and Saudi Arabia reportedly reached a compromise this week that clears the way for major oil producing countries, the so-called OPEC+, to increase production beginning next month.
The Innovator IBD 50 (FFTY) ETF fell 0.7% and remained around the lowest levels of the year. Nvidia (NVDA), an IBD Leaderboard stock, extended an awful week with a slide of more than 4%. It's at the lowest price since June 21 and headed toward the 10-week moving average.
Higher-risk plays such as meme stocks extended losses this week in a massive exodus. AMC Entertainment (AMC) slid almost 3% Friday and plummeted about 24% for the week. GameStop (GME) rose 1.3% Friday but is down about 20% this month.
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Earnings Season Set To Ramp Up For Stock Market
Second-quarter earnings reports start ramping up next week, with Cleveland-Cliffs (CLF), Snap (SNAP) and Crocs (CROX) among the companies announcing. Some 375 quarterly reports are on the week's docket.
Companies with greater exposure to foreign markets are expected to show better revenue gains. While the S&P 500 companies on the whole are estimated to increase revenue 20.2% in Q2, those with more than half their sales outside the U.S. should see a 30.5% increase, according to research from FactSet. Companies with more than half their sales within the U.S. are expected to increase Q2 sales only 17%.
Part of the reason is the big revenue rebound in oil & gas companies. The Energy sector is expected to account for the largest piece of revenue and earnings growth among companies with higher international exposure, says Senior Earnings Analyst John Butters.
Exxon Mobil (XOM) and Chevron (CVX) are big reasons why companies with higher international exposure should outperform. Each generates more than 60% of sales outside the U.S. Take away those two companies, and the earnings growth rate for international-heavy earnings would fall to 63.9% from 87%. The revenue growth rate would fall to 24.5% from 30.5%.
The Energy sector's total sales are expected to surge 88% in Q2, the most of any S&P sector, according to FactSet. The technology sector has the highest proportion of foreign sales; its total sales growth is pegged at more than 31% for Q2, below the S&P 500 total of 69.3%.
Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia
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