The S&P 500 equity index rose a bit on Monday, following a decline in oil prices that weighed on energy shares and offset a rise in financials as Bank of America’s results reinforced expectations of a strong earnings season.
Netflix shares collapsed by more than 14 percent after the bell when it reported results. The company missed Wall Street forecasts for both domestic and international subscribers.
Nasdaq e-mini futures volume rose sharply after Netflix’s results and sold off sharply to end the session down 1 percent.
Facebook, Amazon and Alphabet were down more than 1 percent in after-hours trading. The stocks have led the technology and consumer discretionary sectors back to record-high levels in recent days.
During the regular session, the S&P energy sector index fell 1.2 percent, leading percentage declines among the 11 major S&P sectors. Shares of Exxon Mobil fell 1.0 percent and Chevron fell 0.9 percent. The stocks were among the largest drags on the benchmark index, along with Microsoft, down 0.5 percent.
Oil prices fell more than 4 percent as Libyan ports reopened and traders eyed potential supply increases by Russia and other producers.
Bank stocks rose, reversing their slide on Friday, when JPMorgan Chase, Citigroup and Well Fargo reported results. The S&P 500 financial index was up 1.8 percent, leading sector gains.
Bank of America rose 4.3 percent after the bank’s quarterly earnings number exceeded Street consensus, expectations of lower expenses and growth in loans and deposits. Goldman Sachs gained 2.2 percent ahead of its results, due Tuesday. That was not enough to extend recent gains in the S&P 500, which on Friday had its highest close in more than five months.
There may be a degree of reluctance to undertake large trades ahead of the pickup in earnings reports this week and Federal Reserve Chairman Jerome Powell’s congressional testimony Tuesday and Wednesday.
Sixty S&P 500 companies are due to report this week.
Analysts have forecast second-quarter earnings increased 21.1 percent from a year ago according to Thomson Reuters data.
Of the companies that have reported earnings through last week, 86.7 percent have topped earnings expectations, above the 75-percent average of the past four quarters.
The S&P 500 retail index chalked up a again of 0.3 percent. Retail sales increased a strong 0.5 percent in June, Commerce Department data showed, indicating consumer spending accelerated in the second quarter.
Among stocks, shares of Arconic rose 10.5 percent on a report that the maker of aluminum parts used in planes, cars and buildings is the subject of takeover interest from private-equity firms.
Amazon edged up 0.5 percent as its ‘Prime Day’ shopping event kicked off.
Approximately 5.4 billion shares changed hands on the major domestic equity exchanges, as compared to the 6.6 billion daily average for the past 20 trading days, according to Thomson Reuters data.
Autos Drive Retail Sales Upward
Retail sales rose solidly in June as households increased purchases of automobiles and a range of other goods, cementing expectations for robust economic growth in the second quarter.
According to a report by the Commerce Department released Monday morning, retail sales increased 0.5 percent during June. Data for May was revised higher to show sales rising 1.3 percent instead of the previously reported 0.8 percent gain.
May’s increase was the largest since September 2017. Retail sales in June increased 6.6 percent from a year ago.
If you exclude automobiles, gasoline, building materials and food services, retail sales were unchanged last month after an upwardly revised 0.8 percent increase in May.
These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Core retail sales were previously reported to have risen 0.5 percent in May.
Given the upward revision to May data, the unchanged reading in core retail sales last month likely does not change views that consumer spending accelerated in the second quarter.
Consumer spending, which accounts for more than two-thirds of GDP, decreased sharply during the January to March period, making its slowest pace in nearly five years.
In addition to the solid retail sales data, a sharp narrowing of the trade deficit in April and May has also raised expectations of a strong GDP reading in the second quarter. Growth estimates for the April-June quarter are as high as a 4.9 percent annualized rate.
The economy grew at a 2.0 percent pace in the first three months of 2018. The government will publish its snapshot of second-quarter GDP later this month.
Federal Reserve Chairman Jerome Powell offered an upbeat assessment of the economy last Friday, telling lawmakers that “over the first half of this year, overall economic activity appears to have expanded at a solid pace.”
Consumer spending is being driven by a tightening labor market, which is steadily pushing up wages. Consumption is also being supported by tax cuts and savings.
In June, auto sales increased 0.9 percent after advancing 0.8 percent in May. Receipts at service stations rose 1.0 percent on higher gasoline prices.
Sales at building material stores increased 0.8 percent last month after surging 2.5 percent in May. Online and mail-order retail sales jumped 1.3 percent, the biggest gain since November 2017, after rising 0.4 percent in May.
Receipts at furniture stores rebounded 0.6 percent. Sales at restaurants and bars increased 1.5 percent in June. However, receipts at clothing stores fell 2.5 percent, the largest decline since February 2017. There were also decreases in sales at supermarkets, electronics and appliance stores as well as general merchandise stores.
Spending at hobby, musical instrument and book stores declined further, falling 3.2 percent. That was the largest drop since December 2017.