S&P 500 and Nasdaq record their worst week since March

The S&P 500 and Nasdaq Composite slumped Friday for a fourth straight session, and notched their worst weeks since March, as traders seemed to book profits following the latest corporate earnings releases and US jobs data.

The S&P 500 shed 0.53 per cent to finish at 4,478.03, while the Nasdaq Composite dipped 0.36 per cent to settle at 13,909.24. The Dow Jones Industrial Average lost 150.27 points, or 0.43 per cent, to end at 35,065.62.

All the major indexes reversed earlier gains during afternoon trading, and finished the week with losses. The Nasdaq and S&P dropped about 2.9 per cent and 2.3 per cent, respectively, to notch their worst weeks since March. The Dow edged down 1.1 per cent.

After being lower on the day, the Cboe Volatility Index (VIX) rose to trade above 16 — pointing to investors adding volatility protection.

Friday marked the final day of what was the busiest week of second-quarter earnings season. Amazon jumped 8.3 per cent to its highest level in nearly a year after trouncing expectations on profit and offering positive guidance. Apple lost 4.8 per cent after reporting lower revenue than the year-ago quarter. Both tech giants reported results late Thursday.

In a sign of the boom in travel and services demand, Booking Holdings gained 7.9 per cent on stronger-than-expected results. Amgen popped 5.5 per cent on solid earnings and a boosted guidance.

Earnings reports this season for the quarter ended in June have continued to surprise some Wall Street analysts as the expected slowdown in profits proves less than feared.

About 84 per cent of S&P 500 companies have given results, with 80 per cent surpassing Wall Street expectations, according to FactSet.

Moving on, investors have received clues on the labour market from Friday's payrolls report, showing 187,000 jobs added in July, below the expected 200,000, but with average hourly wages surpassing expectations and pointing toward more inflation, while Wall Street expects the Federal Reserve to maintain steady rates in September, this week's consumer price report for July could have a more significant impact on rate expectations.

Shifting to the eurozone outlook, Capital Economics' Jack Allen-Reynolds predicts clouds on the horizon for the Eurozone, expecting the economy to slip into a mild recession in the second half of the year, despite better-than-expected Q2 outturns, leaving them well below the ECB and consensus forecasts, and highlighting the difficulty for core inflation to converge to the ECB's 2 per cent target without significant wage growth fallback, with German industrial output expected to drop sharply due to high interest rates and weakening demand.

The 10-year Treasury yield also pulled back from a multi month high to 4.04 per cent. Its rise in recent sessions had pressured risk assets.

Overall, most US sectors closed lower on Friday. Consumer Discretionary was the best performer, whilst Tech was the worst.

Futures

The SPI futures are pointing to a 0.2 per cent fall.

Currency

One Australian dollar at 7:20 AM was buying 65.74 US cents.

Commodities

Gold gained 0.37 per cent. Silver added 0.08 per cent. Copper fell 0.82 per cent. Oil gained 1.56 per cent.

Figures around the globe

European markets closed higher. London’s FTSE gained 0.47 per cent, Frankfurt added 0.37 per cent, and Paris closed 0.75 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 0.10 per cent, Hong Kong’s Hang Seng gained 0.61 per cent while China’s Shanghai Composite closed 0.23 per cent higher.

On Friday, the Australian sharemarket closed 0.19 per higher at 7325.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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