US stocks eked out a gain on Friday, but it was not enough to keep the week from ending in the red.
A poor report on Chinese economic growth, a series of mixed earnings reports, and the Boston marathon bombing and subsequent manhunt conspired to push US stocks lower for the week. The Dow Jones Industrial Average finished 317.55 points, or 2.14 percent, lower at 14,547.51. The broad-based S&P 500 closed 33.6 points, or 2.11 percent, down at 1,555.25, while the tech-rich NASDAQ Composite Index dropped 88.89 points, or 2.7 percent, to 3,206.06.
Market insiders described an unsettling week as stocks recorded several large swoops in one direction or another.
The tone was set early in the week when China disclosed first-quarter growth of just 7.7 percent, below the 8 percent forecast by analysts.
The weak China number helped push down the prices of many commodities, including copper — considered a proxy for global economic growth — which hit an 18-month low during the week. Investors were also troubled by a dramatic swoon in gold prices amid speculation Cyprus and other countries might sell gold reserves to pay off debt.
The China news was “somewhat unnerving,” said Hugh Johnson of Hugh Johnson Advisors, who observed a “week of a lot of turmoil and volatility.”
Corporate earnings featured the good, the bad and the ugly. On the positive side, Microsoft reported a 19 percent increase in profits, a sign that the technology giant has found ways to prosper even as the market for personal computers tanks.
Coca-Cola also impressed, notching an 8 percent increase in profits on stronger growth in emerging markets, with volume growth hitting 20 percent in India and 9 percent in China. However, the market was less enthused by earnings from banks. Bank of America lost nearly 5 percent on Wednesday after it reported a big drop in consumer real-estate revenues and disclosed US$500 million in additional legal settlements for investments sold before the housing bust.
Goldman Sachs and Morgan Stanley also took a beating after reporting earnings that underscored anew the difficulty of making money in a low interest rate environment.
“The potential for macroeconomic instability was felt in the quarter and constrained overall corporate and investor activity,” Goldman Sachs chief executive Lloyd Blankfein said.
Citigroup bucked the earnings trend somewhat when its shares edged higher after its earnings release, but chief financial officer John Gerspach was hardly bullish.
“I wouldn’t say I’m positive about the housing market,” Gerspach said.
McDonalds and General Electric earnings also disappointed.
“Everybody is guiding down,” Lee Munson of Portfolio LLC said. “A lot of management in corporate America is giving a more sober second quarter guidance.”
In the coming week, investors will hear from additional companies, including oil giant ExxonMobil, industrial heavyweight Caterpillar, aerospace titan Boeing and technology star Apple.
Investors will be particularly keen to hear from Apple amid constant speculation that orders of its signature products have stagnated. Apple’s latest drop resulted in its ceding its distinction to ExxonMobil as the US company with the largest market capitalization. The coming week will also see fresh data on housing and durable goods as well as an initial reading of first-quarter GDP.