U.S. Stocks Edge Lower Despite Tech Stocks Rally

U.S. stocks fell Friday morning despite earnings reports showing that the world's largest technology companies are thriving.

The S&P 500 fell 8 points, or 0.3%. Still, the benchmark is on track to end the month up more than 4%, its best performance since April. The Dow Jones Industrial Average fell 163 points, or 0.6%,. The tech-heavy Nasdaq Composite added 0.3%.

Shares in Apple, Facebook and Amazon.com were up as investors cheered the strength of their operations during the coronavirus pandemic. Amazon.com reported soaring quarterly sales and profit after markets closed on Thursday, sending its shares up 4.2%. Apple, which posted better-than-expected sales, climbed 5.6%. Facebook's sales continued to expand despite a string of controversies, prompting its shares to climb 7%.

"The tech companies are giving us a potentially distorted view of stock markets," said Jane Foley, senior currency strategist at Rabobank. "For every company that's pushing higher on the S&P 500, there are more that aren't."

Once large U.S. technology stocks are set aside, the mixed picture for global equities reflects a continuing tug of war in markets, according to investors.

"The push-pull factors remain the same," said Edward Park, deputy chief investment officer at Brooks Macdonald. " We've seen incremental vaccine improvements but the market seems to have priced that in for the medium term. But there's still the risk of a second wave, or an elongated first wave of the virus, deepening China-U. S. tensions and heightened anti-China rhetoric from western allies of the U.S."

Concerns about the health of the American economy were underlined by Congressional leaders and White House officials failing to strike a deal on coronavirus relief Thursday night, just hours before federal jobless benefits officially expired Friday.

Consumer spending, a crucial indicator for the economy's path in the coming months, rose 5.6% in June but appears to have weakened in recent weeks, restraining the economic recovery from the coronavirus outbreak.

The U.S. dollar continued to slide, and is on track to complete its worst month in nearly a decade, according to FactSet. The ICE U.S. dollar index, which measures the greenback against a basket of currencies, edged down 0.1%. Concern over U.S. economic performance, following a sharp contraction in the second quarter, is weighing on the currency, analysts said.

Meanwhile new coronavirus cases in the U.S. climbed back above 70,000 as daily reported deaths rose to their highest level in more than a month Thursday, according to data compiled by Johns Hopkins University.

Analysts said they feared political complications in the U.S. after President Trump floated the idea of delaying the November presidential election for the first time in a tweet Thursday.

"The U.S. GDP data was starkly horrible, there were some political concerns raised by the president talking about delays to the election, but also that the U.S. hasn't dealt with the pandemic as well as other western countries," Ms. Foley said.

"I do suspect that the rush to sell the dollar is now looking a bit overdone. I would anticipate some pullbacks," she said.

Shares in Chevron fell 3.6% after it posted steep losses in the second quarter as lower oil and gas prices offset production gains and the drop in global travel crimped fuel demand amid the pandemic.

Overseas, the pan-continental Stoxx Europe 600 rose 0.5%, led higher by the technology and financial-services sectors. Shares in Nokia jumped 13.3% after the Finnish telecommunications giant's second-quarter earnings beat expectations.

Futures contracts for delivering gold in August rose 1.3% to $1,993.00 a troy ounce. The metal, a traditional haven for investors, is on track for its largest one month percentage gain since February 2016.

The yield on the benchmark 10-year U.S. Treasury ticked down to 0.537% Friday, down from 0.540% on Thursday.

In the Asia-Pacific region, stocks painted a mixed picture by the close of trading. China's major equity benchmark, the Shanghai Composite Index, rose 0.7%. Japan's Nikkei 225 index fell 2.8%, and Australia's S&P ASX 200 index dropped 2%. Both countries face fresh outbreaks of coronavirus after previously managing to contain infections earlier this year.

Write to Anna Isaac at anna.isaac@wsj.com

  (END) Dow Jones Newswires
  07-31-20 1049ET
  Copyright (c) 2020 Dow Jones & Company, Inc.

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