Stocks down for 4th straight week
Chevron's profit warning drags on blue chips ahead of an onslaught of quarterly reports. Dow and S&P 500 slide for fourth straight week.
NEW YORK (CNNMoney.com) -- Blue chips slipped Friday after a profit warning from Chevron dragged on oil stocks, but the Nasdaq managed modest gains for the day at the end of a down week for Wall Street.
The Dow Jones industrial average (INDU) lost 37 points, or 0.4%. The S&P 500 (SPX) index fell 3 points, or 0.4%. The Nasdaq (COMP) rose 3 points, or 0.2%.
The Dow and S&P 500 both closed lower for their fourth straight week. The Nasdaq closed lower for the third of four weeks.
Stocks have surged last spring as investors bet that the worst of the recession had already happened. But recent signs that the slowdown is far from over have driven markets lower. Since peaking on June 11 with an advance of 40% off its March 9 lows, the S&P 500 has lost 7%.
Alcoa (AA, Fortune 500) began the second-quarter reporting period Wednesday, announcing a narrower-than-expected quarterly loss. Results really pick up next week, when Goldman Sachs (GS, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Intel (INTC, Fortune 500) and General Electric (GE, Fortune 500) all report.
S&P 500 companies are expected to see profits decline by 36% from a year ago, according to the latest figures from Thomson Reuters.
In the first quarter, investors responded well to results that met, let alone beat, lowered forecasts. While the bar is set pretty low for the second quarter too, just meeting expectations won't be enough this time around.
"Investors are going to expect companies to hit the high end of forecasts," said Jack Ablin, chief investment officer at Harris Private Bank. "They want to see revenue growth and tangible evidence of improvement."
Oil: Chevron (CVX, Fortune 500) said late Thursday that a drop in U.S. refining margins would cut into second-quarter profits and that the impact of higher oil prices was being countered by the weaker dollar. Shares fell 2.6% Friday.
Fellow Dow oil component Exxon Mobil (XOM, Fortune 500) lost 1.5%. The Amex oil index lost 1.3%.
Oil services stocks were also pressured by a selloff in the price of crude.
Energy prices slumped. U.S. light crude oil for August delivery fell 52 cents to settle at $59.89. Crude lost 10% of its value this week.
Economy: The May trade balance narrowed to $26 billion -- the lowest reading in a decade and a surprise to economists who were looking for it to expand to $30 billion. The April trade deficit stood at a revised $28.8 billion in April.
The University of Michigan's consumer sentiment index fell to 64.6 in July from 70.8 in June. Economists thought it would fall to 70.
General Motors: The automaker emerged from bankruptcy protection Friday with fewer brands, dealerships and billions less in debt.
The so-called new GM will be majority owned by the U.S. government, with the Canadian government, and the United Auto Workers union also taking a share. Old GM's bondholders will eventually own about 10% of the company, although old GM shareholders will not.
Bonds: Treasury prices rallied, lowering the yield on the benchmark 10-year note to 3.30% from 3.40% late Thursday. Treasury prices and yields move in opposite directions.
Other markets: In global trade, Asian and European markets ended lower.
In currency trading, the dollar gained against the euro and fell against the Japanese yen.
COMEX gold for August delivery settled down $3.70 to $912.50 an ounce.
Market breadth was mixed. On the New York Stock Exchange, losers topped winners by a narrow margin on volume of 922 million shares. On the Nasdaq, advancers narrowly topped decliners on volume of 1.69 billion shares.
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