US close: Stocks drift lower as oil slips, but see strong gains for the week

Wall Street was slightly in the red on Friday, albeit after a strong week that saw many short-sellers forced to cover their positions, as bank sector earnings came in less weak than analysts feared and oil prices remained near their recent highs.

On Friday, the Dow Jones Industrial Average slipped 0.16% or 28.97 points to 17,897.46 points, the S&P 500 0.10% or 2.05 points to 2,080.73 and the Nasdaq fell by another 0.16% or 7.07 points to 4,938.22.

That came as investors mulled data revealing a further slowdown in China’s economic growth in the first quarter and a worse-than-expected drop in US industrial production.

However, for the week as a whole the S&P 500 was standing 1.6% taller and the Dow Jones Industrials tacked on another 1.8% rise.

Short bets against stocks in the S&P 500 stood at 4.2% of all shares available as of 31 March, according to Bloomberg data, slightly off from the 4.4% at the end of February - the highest tally since 2008.

Would the Fed risk overshooting its target for inflation?

In parallel, speaking on the sidelines of a JP Morgan conference in Washington DC, Chicago Fed president Charles Evans said the central bank needed to keep defend its inflation credentials, even at the risk of so-called 'overshooting' its target of 2.0%.

"Inflation is the responsibility of the central bank. If we are at one percent and it is supposed to be two percent, that is us. If it is three percent, that is us," Evans said, according to Reuters.

China in the background

Gross domestic product in the People's Republic of China rose 6.7% year-on-year in the first three months of 2016, down from 6.8% growth in the previous quarter, the National Bureau of Statistics said. The figure was in line with analysts’ estimates but marked the slowest quarterly growth for China since the height of the financial crisis in 2009.

Other Chinese data came in more positive. Retail sales jumped 10.3% in March, beating forecasts for a 10.2% increase. Industrial production climbed 6.8% in March compared to forecasts for a 6% gain.

In the US, industrial production fell more than expected in March, according to the latest data from the Federal Reserve. Production was down 0.6% from February, which was much steeper than the 0.1% dip forecast by economists.

Manufacturing output fell 0.3%, with the production of durables down 0.4%.

Survey results from the University of Michigan showed consumer sentiment eased in April. The preliminary estimate for the confidence index was 89.7 in April, down from 91.0 in March and worse than the 92.0 reading expected by analysts.

“With the job market very strong and stocks almost back to their highs, we see no reason for this decline in the index to become a sustained trend,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

The Empire State index for April rose to its highest level in more than a year to 9.56 compared to 0.62 a month earlier.

Total long-term capital flows to the US reached $72bn in February, according to the Treasury Department, following outflows of $11.9bn in the previous month.

Oil futures drop ahead of producers' meeting in Doha

West Texas Intermediate was down $1.07 per barrel to $40.36 a barrel, despite another decline in the weekly Baker Hughes US oil rig count.

On Thursday, the International Energy Agency said the global oil glut was set to ease by the end of this year. It also said that any potential agreement to freeze output at the Doha meeting would have only a limited impact on supplies.

“Overall there’s a slight negative bias but this could be no more than a touch of position-squaring after this week’s rally and ahead of the weekend,” said David Morrison, senior market strategist at SpreadCo.

“Investors are well aware of Sunday’s meeting in Doha between OPEC and non-OPEC producers to discuss a freeze on crude output. Equity movements have a strong positive correlation to the oil price so we may see some profit-taking now given uncertainty ahead of the meeting.”

In company news, Citigroup slipped 0.13% despite reporting first quarter profit earnings per share of $1.10 (consensus: $1.03); but for the week as a whole were up by nearly 10.0%. Over the first three months of the year the lender's profits dropped by 27.0%.

In comparison, JP Morgan Chase & Co. reported a 11% fall in the first quarter net income and Bank of America reported a 16% drop.

Valeant Pharmaceuticals International Inc. fell after a report Thursday that the company may sell off parts of its business.

From a sector standpoint the worst performers on Friday were: Exploration&Production (-1.98%), Computer hardware (-1.73%) and Pipelines (-1.54%).

S&P 500 - Risers

Transocean Ltd. (RIG) $9.72 +4.97%
Urban Outfitters Inc. (URBN) $31.43 +3.35%
Regions Financial Corp. (RF) $8.74 +3.07%
Electronic Arts Inc. (EA) $66.84 +2.93%
Chipotle Mexican Grill Inc. (CMG) $469.29 +2.91%
Micron Technology Inc. (MU) $10.69 +2.79%
Essex Prty Trust Inc. (ESS) $224.87 +2.73%
NRG Energy Inc. (NRG) $13.65 +2.55%
Mosaic Company (MOS) $26.11 +2.51%
McKesson Corp. (MCK) $172.77 +2.48%

S&P 500 - Fallers
Vertex Pharmaceuticals Inc. (VRTX) $81.75 -6.12%
Seagate Technology Plc (STX) $25.59 -5.61%
National Oilwell Varco Inc. (NOV) $27.68 -3.92%
Marathon Petroleum Corporation (MPC) $37.90 -3.86%
Qorvo, Inc. (QRVO) $47.74 -3.81%
Pioneer Natural Resources Co. (PXD) $144.13 -3.70%
Valero Energy Corp. (VLO) $59.49 -3.36%
Western Digital Corp. (WDC) $40.49 -3.18%
Endo International Plc (ENDP) $26.33 -3.06%
Spectra Energy Corp. (SE) $29.40 -3.03%

Dow Jones I.A - Risers
Travelers Company Inc. (TRV) $116.23 +0.75%
Coca-Cola Co. (KO) $46.10 +0.59%
Microsoft Corp. (MSFT) $55.65 +0.52%
Home Depot Inc. (HD) $135.01 +0.48%
Wal-Mart Stores Inc. (WMT) $69.06 +0.38%
International Business Machines Corp. (IBM) $151.72 +0.37%
3M Co. (MMM) $168.78 +0.37%
Procter & Gamble Co. (PG) $82.30 +0.35%
Johnson & Johnson (JNJ) $110.18 +0.31%
Boeing Co. (BA) $131.13 +0.21%

Dow Jones I.A - Fallers
Apple Inc. (AAPL) $109.85 -2.01%
Goldman Sachs Group Inc. (GS) $158.52 -1.49%
Cisco Systems Inc. (CSCO) $27.90 -1.24%
JP Morgan Chase & Co. (JPM) $61.87 -1.15%
Intel Corp. (INTC) $31.46 -1.07%
Chevron Corp. (CVX) $97.23 -0.77%
American Express Co. (AXP) $62.14 -0.59%
Merck & Co. Inc. (MRK) $56.14 -0.55%
Exxon Mobil Corp. (XOM) $84.97 -0.54%
Unitedhealth Group Inc. (UNH) $127.33 -0.51%

Nasdaq 100 - Risers
Electronic Arts Inc. (EA) $66.84 +2.93%
Micron Technology Inc. (MU) $10.69 +2.79%
Mondelez International Inc. (MDLZ) $43.02 +2.04%
Dollar Tree Inc (DLTR) $81.75 +1.87%
Vodafone Group Plc ADS (VOD) $32.83 +1.48%
Mattel Inc. (MAT) $33.75 +1.41%
T-Mobile Us, Inc. (TMUS) $39.29 +1.24%
Costco Wholesale Corp. (COST) $153.17 +1.17%
Kraft Heinz Co. (KHC) $78.05 +1.14%
Charter Communications Inc. (CHTR) $203.06 +1.12%

Nasdaq 100 - Fallers
Vertex Pharmaceuticals Inc. (VRTX) $81.75 -6.12%
Seagate Technology Plc (STX) $25.59 -5.61%
Western Digital Corp. (WDC) $40.49 -3.18%
Endo International Plc (ENDP) $26.33 -3.06%
Norwegian Cruise Line Holdings Ltd. - Ordinary Shares (NCLH) $53.08 -2.64%
Biomarin Pharmaceutical Inc. (BMRN) $86.75 -2.36%
Skyworks Solutions Inc. (SWKS) $75.06 -2.23%
Broadcom Limited (AVGO) $155.49 -2.10%
NetApp Inc. (NTAP) $25.12 -2.03%
Apple Inc. (AAPL) $109.85 -2.01%