Another wave of selling hit the stock market Friday as the Nasdaq composite breached the 13,000 level. Merck was a top gainer in the Dow Jones Friday, but an earnings sell-off nailed shares of American Express.
Meanwhile, the 10-year Treasury yield was trading around 4.91% after hitting an intraday high of 4.99%. West Texas Intermediate crude oil futures settled at $88.75 a barrel, down 0.7%.
Rising interest rates and a strong U.S. dollar have proved to be a formidable headwind for stocks. There's still some trepidation in the market about a sharper-than-expected slowdown for the U.S. economy next year.
Federal Reserve Chairman Jerome Powell on Thursday said financial conditions have tightened considerably as a result of the soaring 10-year yield. The Fed might be done with its rate-hike campaign, but the stock market is worried about a U.S. economy that could be headed for a rough patch if consumer spending slows.
The Dow Jones index extended its losing streak to three sessions, weighed down by a 5% drop for AXP stock. After a bearish reversal Thursday in heavy volume, American Express gapped down Friday despite reporting its sixth-straight quarter of record revenue.
Merck stock, which has been on a downtrend since early May, added 2% as it finds support near the 100 level. For the week, the Dow Jones gave back 1.6%.
Outside The Dow Jones Index
Weakness in solar and financial stocks weighed on the S&P 500, which ended the day with a loss of 1.3%. The index closed below its 200-day line for the first time since March. The weekly loss was 2.4% in higher turnover.
Regions Financial slumped more than 10% after earnings, revenue and net interest income all came in below expectations. Other regional banks like Fifth Third and Comerica also lagged badly in the S&P 500.
IBD's solar group was the day's worst performer, down nearly 6%. SolarEdge crashed 27% after the company gave a bleak revenue outlook, partly due to weak demand in Europe. Group peer Enphase swooned nearly 15%.
Weakness in security software stocks weighed on the Nasdaq composite, which breached the 13,000 level. Palo Alto Networks fell sharply for the second straight session, but is holding support at the 50-day line so far.
The Nasdaq marked a weekly decline of 3.2% in higher volume. The security software group fell 3.6% for the week.
Technology stocks in the Dow Jones index like Salesforce, Intel and Apple closed with losses of 1.5% to 2%.
Futures Fall As Yields Top 5%; Titans Lead Earnings Wave
Decliners Outweigh Advancers
Declining stocks beat advancers on the Nasdaq by less than 2 to 1. The ratio was slightly more than 2 to 1 negative on the New York Stock Exchange.
Late in Friday's session, there were 13 new highs and 285 new lows, continuing a bearish trend. On the Nasdaq, new highs totaled 15 with 272 new lows.
Leaderboard stock Zscaler is testing its 21-day line after a tough reversal Thursday. Shares soared early in the session after Jefferies upgraded shares, but a 4.3% intraday gain faded to a loss of 0.8% by the close.
Tesla fell below its 200-day line, a longer-term support indicator, after Thursday's earnings downdraft.
The coming week is packed with high-profile earnings reports due in the technology sector. Google parent Alphabet, Microsoft, Meta Platforms and Amazon.com all are on the earnings docket.
Check out the latest Earnings Preview story that highlights a call-option trade for META.
Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.
