U.S. Stocks suffered broad declines on Friday,
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Posted On: 07/25/2014 5:02:24 PM
U.S. Stocks
suffered broad declines on Friday, with the Dow industrials posting their biggest slide in a week, amid disappointing news from companies such as Visa Inc. V -3.58% and Amazon.com Inc. AMZN -9.65%
The Dow Jones Industrial Average fell 123.23 points, or 0.7%, at 16960.57 , its biggest percentage decline since July 17. A 3.6% decline in Visa's stock—which has an outsize impact because of the average's construction methodology—accounted for more than a third of the decline.
The S&P 500 index lost 9.64 points, or 0.5%, to 1978.34 , retreating from Thursday's record close. The Nasdaq Composite Index dropped 22.54 points, or 0.5%, to 4449.56.
Friday's decline left the broad S&P 500 within 0.1% of where it started the week, reflecting investors' ambivalence as corporate profits continue to grow but stocks' march into record territory has left valuations on the pricier side of historical averages.
Money managers are also watching for any hints on when the Federal Reserve might raise interest rates, stepping back from an accommodative stance widely believed to have helped fuel stocks' multiyear rally.
The Dow fell 0.8% on a weekly basis, while the Russell 2000 index of small companies' shares posted its third-straight weekly decline.
"We think it's prudent to take some risk off the table," said Michael Fredericks, a portfolio manager on the $8.5 billion BlackRock Multi-Asset Income Fund. "Stocks have gotten more expensive. There's an increased risk that the market's perception of when the Fed will raise rates will shift, and be a negative for stocks."
The fund has sold some stocks in recent weeks, holding more cash, to bring down its exposure to relatively risky assets such as equities and high-yield debt, Mr. Fredericks said.
Meanwhile, traders said conflicts in the Middle East and Ukraine and uncertainty over when the Federal Reserve will raise interest rates has left some investors either sitting on their hands or away from their desks, traders said.
"I was in a meeting early this week, and given all the earnings and with all the noise in the Middle East and Russia, we thought this would be a busy week for the asset class," said Joseph Spinelli, head of Americas single-stock trading at Deutsche Bank AG DBK.XE -0.63% .
Instead, share-trading volumes each day this week were well below this year's daily average. "This is just one of those times where clients are taking a wait-and-see approach just given the geopolitical risk and all the macro data points next week," Mr. Spinelli said.
The coming week brings a statement from the latest meeting of the Fed's policy-setting committee, as well as government data on second-quarter gross domestic product and July payrolls.
On Friday, earnings reports led to some big moves in single stocks.
Visa's shares fell after the credit-card company trimmed its forecast for annual revenue growth. The slide accounted for 51 points' worth of the decline in the Dow, which unlike other market benchmarks weights its components by stock price, rather than market value.
suffered broad declines on Friday, with the Dow industrials posting their biggest slide in a week, amid disappointing news from companies such as Visa Inc. V -3.58% and Amazon.com Inc. AMZN -9.65%
The Dow Jones Industrial Average fell 123.23 points, or 0.7%, at 16960.57 , its biggest percentage decline since July 17. A 3.6% decline in Visa's stock—which has an outsize impact because of the average's construction methodology—accounted for more than a third of the decline.
The S&P 500 index lost 9.64 points, or 0.5%, to 1978.34 , retreating from Thursday's record close. The Nasdaq Composite Index dropped 22.54 points, or 0.5%, to 4449.56.
Friday's decline left the broad S&P 500 within 0.1% of where it started the week, reflecting investors' ambivalence as corporate profits continue to grow but stocks' march into record territory has left valuations on the pricier side of historical averages.
Money managers are also watching for any hints on when the Federal Reserve might raise interest rates, stepping back from an accommodative stance widely believed to have helped fuel stocks' multiyear rally.
The Dow fell 0.8% on a weekly basis, while the Russell 2000 index of small companies' shares posted its third-straight weekly decline.
"We think it's prudent to take some risk off the table," said Michael Fredericks, a portfolio manager on the $8.5 billion BlackRock Multi-Asset Income Fund. "Stocks have gotten more expensive. There's an increased risk that the market's perception of when the Fed will raise rates will shift, and be a negative for stocks."
The fund has sold some stocks in recent weeks, holding more cash, to bring down its exposure to relatively risky assets such as equities and high-yield debt, Mr. Fredericks said.
Meanwhile, traders said conflicts in the Middle East and Ukraine and uncertainty over when the Federal Reserve will raise interest rates has left some investors either sitting on their hands or away from their desks, traders said.
"I was in a meeting early this week, and given all the earnings and with all the noise in the Middle East and Russia, we thought this would be a busy week for the asset class," said Joseph Spinelli, head of Americas single-stock trading at Deutsche Bank AG DBK.XE -0.63% .
Instead, share-trading volumes each day this week were well below this year's daily average. "This is just one of those times where clients are taking a wait-and-see approach just given the geopolitical risk and all the macro data points next week," Mr. Spinelli said.
The coming week brings a statement from the latest meeting of the Fed's policy-setting committee, as well as government data on second-quarter gross domestic product and July payrolls.
On Friday, earnings reports led to some big moves in single stocks.
Visa's shares fell after the credit-card company trimmed its forecast for annual revenue growth. The slide accounted for 51 points' worth of the decline in the Dow, which unlike other market benchmarks weights its components by stock price, rather than market value.
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