The major averages pulled back pushing the Dow Jones Industrial average into the red for the week, as inflation fears overshadowed strong retail sales numbers and better-than-expected earnings reports.The Dow Jones lost 299 points or 0.86%. The S&P 500 dropped 32 points or 0.75%. The Nasdaq Composite shed 115 points or 0.8%.
The three averages closed the week lower to each snap 3-week win streaks. The Dow ended the week down 0.52%, while the S&P 500 dipped 0.97% and the Nasdaq Composite fell 1.87% during the same period.
A U.S. consumer sentiment index from the University of Michigan came in at 80.8 for the first half of July, down from 85.5 last month and worse than economists estimated, who projected an increase. The report released Friday showed inflation expectations rising, with consumers believing prices will increase 4.8% in the next year, the highest level since August 2008.
The Dow gave up its gain for Friday shortly after the University of Michigan report came out 30 minutes into the session. Losses increased as the day went on with major averages rounding out the day near their lows.
The market was held back all week by inflation fears although the S&P 500 and Dow did touch new all-time highs briefly. On Tuesday, the consumer price index showed a 5.4% increase in June from a year ago, the fastest pace in nearly 13 years.
Stocks got off to a good start Friday with the Dow rising more than 100 points to above 35,000 shortly after the open. Data released before the bell showed retail and food service sales rose 0.6% in June, while economists surveyed by Dow Jones had expected a 0.4% decline. If that level held, it would have been the Dow's first close ever above 35,000.
Despite the week's losses, the Dow is still up 13% for the year and sits just 1% from an all-time high. The S&P 500 is up 15% on the year and is about 1.4% below its record level.
Energy stocks, the hottest part of the market in 2021, fell into correction territory on Friday as oil prices pulled back from their highs. The Energy Select Sector SPDR Fund fell more than 2% on Friday, the worst of any group and bringing its losses from its high to 14%. Still, the sector is up about 29% in 2021, making it the top performer of any of the 11 main industry groups.
Weaker performance from technology stocks also weighed on the market Friday. Shares of Netflix fell ahead of the streaming giant's second-quarter earnings report next week. Nvidia shares also dropped.
Investors digested strong earnings results from the first major week of second-quarter reports. Though some of the nation's largest companies posted healthy earnings and revenues amid the economic recovery, the reaction in the stock market has so far been muted.
The Financial Select Sector SPDR Fund is down this week despite big profit growth numbers posted by the likes of JPMorgan Chase and Bank of America.
For 18 S&P 500 companies that beat analyst estimates for second-quarter earnings this week, the average earnings-per-share result was 18% higher than expected. But those companies saw their shares fall 0.58% on average after reporting.
Much of the market's upward pressure over the last week has come from a handful of mega-cap internet and communications stocks. Apple and Google-parent Alphabet are up this week.
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