Summary

The major domestic equity indexes stocks were lower on Friday as weak earnings from General Electric weighed, while tech shares retreated from record highs and energy tracked the price of oil lower.

GE closed down 2.9 percent to $25.91 and hit its lowest level since October 2015. The company reported a nearly 60 percent slump in earnings and said its full year profit and cash flow will be at the low end of its forecasts.

The company’s peers in the industrial sector, such as Caterpillar and 3M, were also lower.

Honeywell touched a record high and ended up 1.0 percent at $136.35 after it raised the low-end of its profit forecast.

The S&P 500 energy sector fell more than 1 percent as oil prices lost nearly 3 percent, after a consultancy report forecast a rise in OPEC production for July despite the cartel’s pledge to curb output.

The S&P 500 technology sector was lower after posting two consecutive record closing highs. The Nasdaq Composite was on track to cap a 10-day streak of gains, its best since February 2015, after closing at a record high on Thursday.

Tech continues to be the best performing S&P sector this year despite concerns over stretched valuations.

Microsoft fell 0.6 to $73.79 despite a strong earnings number after the bell Thursday, propped in large part by its fast-growing cloud computing business.

The Street’s expectation is that the S&P 500 earnings will likely be up 9.6 percent year-over-year, above the 8-percent rise projected at the start of the month, according to Thomson Reuters I/B/E/S.

The S&P and the Nasdaq rose for a third straight week.

Capital One reported strong earnings, helped by growth in card loans and net interest income. Its shares rose 8.6 to $87.94, making it the largest daily percentage gain in eight years.

Visa rose 1.5 percent to $99.60. The world’s largest payments network operator raised its annual earnings forecast.

Approximately 5.73 billion shares changed hands on the major domestic equity exchanges, a number that was below the 6.31 billion share daily average over the past 20 sessions.

Crude Prices Down

The prices for crude oil were lower on Friday, settling down about 2.5 percent after a consultancy forecast a rise in OPEC production for July despite the group’s pledge to curb output, reigniting concerns the global market will stay awash with crude.

Brent crude futures were down $1.24 or 2.52 percent at $48.06 a barrel. West Texas Intermediate (WTI) futures were down $1.15 or 2.45 percent, at $45.77 a barrel.

Both Brent and our domestic crude posted weekly losses of more than 1.6 percent after Petro-Logistics said OPEC crude production would rise 145,000 barrels per day (bpd) this month. Petro-Logistics, which tracks OPEC supply forecasts, said this would take the group’s combined output above 33 million bpd.

Higher supply from Saudi Arabia, the United Arab Emirates (UAE) and Nigeria would drive this month’s gains, it said.

OPEC and some non-OPEC states, such as Russia, have been trying to cut production 1.8 million bpd through the end of March 2018.

On Monday, several ministers from OPEC and non-OPEC member countries will meet in St. Petersburg. Kuwaiti Oil Minister Essam al-Marzouq, whose country heads the joint ministerial committee, said attendees would discuss continuing the production cuts.

The committee can make recommendations to adjust the deal if needed. However, it is unlikely that the group will address rising production from Nigeria and Libya, two OPEC members exempted from the cuts.

Domestic oil drillers cut one rig in the week to July 21, according to data from Baker Hughes. The decline was la pause in a drilling recovery expected to continue through at least 2019.

The discount of domestic crude futures front-month versus the second-month prices briefly fell to just 12 cents per barrel during the trading session, the lowest since December 2014. This makes it less profitable for speculators to buy oil, sell it forward and store it in the meantime.

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