US stocks edged lower on Friday, as prospects for fresh record highs faded and markets reflected on how much more monetary tightening to expect from the Federal Reserve after this week’s rate hike.
The S&P 500 market bellwether closed – to the very integer where it began this week. On Friday it closed down 0.2% at 2258 and was led by retailers. Nordstrom (NYSE:JWN) led the pack of fallers, down 8.7% to $50.48 after a downgrade by JP Morgan. But right behind it was Kohl's Corp (NYSE:KSS) down 8% to $51.14, Macy's Inc (NYSE:M) down 6.7% to $37.47, and Gap Inc (NYSE:GPS) down 6.5% at $23.91.
The more hawkish stance by the Fed has upset investors. Apart from the best-trailer rate hike in living memory the bank indicated that it may go for three hikes in 2017, up from a September estimate of two.
And that doesn’t even factor in what it might do if US President-elect Donald Triump initiates most of his reflationary policies at home and curbs cheaper foreign imports.
The equities market was muted on Friday, with the real estate and utilities sectors leading the way higher, and financials posting the biggest decline.
The Dow Jones Industrial Average, which started the session higher and threatened to re-test a record 20,000 level after an attempt earlier in the week, saw momentum fizzle out and close down on the day by 0.04% at 19,843. But at least it managed to close 73 points higher than where it began the week.
The S&P Midcap 400 closed down 0.2% at 1667 and led by retailers as well. Fossil Group (NASDAQ:FOSL) closed down 7.8% to $28.87, while J.C. Penney Company Inc (NYSE:JCP) closed down 7% to $8.62, while Deckers Outdoor Corp (NYSE:DECK) was third, down 6.8% at $54.16.
The S&P SMallcap 600 closed down 0.5% at 842 and led by Natus Medical Inc (NASDAQ:BABY), down 7.6% to $34.85.
The wider small-cap Russell 2000 finished down 0.2% at 1364.
Conversely, Toronto’s TSX Composite closed up 0.2% at 15,252.
Early trading
US stocks opened firmer on Friday and the Dow Jones Industrial Average made a fresh assault at the 20,000 milestone but so far any negative sentiment on the bourse was holding back lofty levels.
The Dow made the best gains of the majors and was up 0.4% at 19,921 in early morning trading, having hit an intraday high of 19,923.17.
The S&P 500 market bellwether rose 0.07% to 2,2643. The tech-heavy Nasdaq Composite advanced by 0.2% to 5466.
The top gainer on the S&P 500 was First Solar Inc (NASDAQ:FSLR) up 3.9% to $33.89 with the stock bouncing back from weakness the previous session.
But holding the market back was stocks like retailer Nordstrom (NYSE:JWN), down 6.5% to $51.71 after broker JPMorgan Chase downgraded the stock to "underweight" from "neutral" following meetings with management, and based its decision on relatively flat sales and no "silver bullets" on the horizon to improve trends.
The S&P Midcap 400 was up 0.7% at 1682 and led by electronics group Jabil Circuit (NYSE:JBL) up 15.8% to $24.97 after overnight earnings topped Wall Street estimates for the quarter.
The company reported adjusted earnings of 69 cents a share on revenue of $5.1bn for the fiscal first quarter. For the second quarter, Jabil sees adjusted earnings of 35 cents to 57 cents a share on revenue of $4.2bn to $4.5bn.
The S&P Smallcap 600 was up 0.7% to 852 and led by grocer Core-Mark Holding (NASDAQ:CORE) up 12% to $44.07 after broker Jefferies reiterated a Hold rating on Core-Mark, and raised the price target to $40.00 (from $33.00), following the company's announced three-year deal with Wal-Mart (NYSE:WMT) to become the primary distributor of certain in-store merchandise for about 530 outlets.
Pre-Open
US stocks are set to open higher on Friday and could breach fresh record highs, including the 20,000 mark for the Dow Jones Industrial Average, although some stocks are going to make it a struggle to the top.
The S&P 500 market bellwether is indicated up 0.2%.
The bourse may be helped by big mover General Electric (NYSE:GE) up 1.2% to $31.62 after it was upgraded to "outperform" from "market perform" by brokers at Bernstein, noting a positive transformation in GE's asset portfolio and underperformance by the shares this year.
But making the climb to record highs more difficlult were a good smattering of stocks.
It’s all about cloud these days, as Oracle (NYSE:ORCL) discovered. Before the bell its shares were down 2.9% to $39.69 after investors were disappointed with the company’s perfeomance in the cloud sector. That despite recording adjusted quarterly earnings of 61 cents per share, one cent above estimates, while the business software maker's revenue was slightly below Street forecasts.
But taking a sizeable hit were shares of retailer Nordstrom (NYSE:JWN) down 3.9% to $53.11 pre-market after broker JPMorgan Chase downgraded the stock to "underweight" from "neutral" following meetings with management, and based its decision on relatively flat sales and no "silver bullets" on the horizon to improve trends.
Honeywell (NYSE:HON) was also lower, by 1.4% to $114.69 after the company said its current-quarter earnings would come in at the low end of its prior forecast, and gave a 2017 earnings outlook that falls largely below estimates. The company did give upbeat comments about 2017, despite what it sees as a slow growth global environment.
Hotel search platform Trivago GmbH (NASDAQ:TRVG), which is majority owned by online travel giant Expedia Inc (NASDAQ:EXPE), lists on Nasdaq on Friday but at a price well below market expectations.
The German-based company priced its initial public offering (IPO) yesterday at US$11 per American depository shares (ADS), much lower than the indicated range of $13 to $15.