Thursday, July 27, 2017
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Market Digest Online FRIDAY, JULY 28, 2017: The Dow Hones closed at 21,796 - up 85 points while the Nasdaq composite closed 0.6 percent lower at 2,475.42 and fell more than 1 percent earlier in the session. The S&P 500 also closed lower at 6,382.19, slipping 0.1 percent as tech stocks dropped 0.8 percent to lead decliners. The tech sector had notched an intraday record earlier in the session, along with the Nasdaq and the S&P.

"You're now seeing some pressure on the broader market after the initial pop at the open," said Daniel Deming, managing director at KKM Financial. "It just feels like momentum is waning here."

Tech faced pressure as investors took profits off the table following strong earnings from companies in the space.

Earlier, tech was led higher by shares of Facebook, which initially soared as much as 5.96 percent to a record before paring gains.

The social media giant reported second-quarter earnings per share of $1.32 on revenue of $9.32 billion. Analysts polled by Reuters expected the company to post earnings per share of $1.13 on sales of $9.2 billion. The company also reported better-than-expected monthly active users, a key metric for Facebook.

Overall, this earnings season has been positive, with most S&P 500 companies topping profit and sales estimates. However, a lot of companies aren't necessarily reinvesting their capital in themselves, said Omar Aguilar, CIO of equities at Charles Schwab Investment Management.

"That has a lot to do with what's going on in Washington," Aguilar said, referring to the uncertainty around the implementation of tax reform and fiscal stimulus from the Trump administration. He also said the market could face a correction later in the year if it becomes clear that tax reform won't happen this year.

Uncertainty about what tax reform might look like grew Thursday after House speaker Paul Ryan said in a statement that a border adjustment tax is now off the table. Art Hogan, chief market strategist at Wunderlich Securities, said market participants are starting to think a new tax plan will be less than what was originally promised by the administration.

"You take that and couple it with the fact that transports are maybe signaling something in the economy that the broader market hasn't picked up on, and it's natural to see some profit-taking, especially in tech," Hogan said. Dow transports fell 3.11 percent and posted their worst day since 2016.

In economic news, initial jobless claims came in at 244,000, slightly above the expected 240,000. Durable goods orders, meanwhile, rose 6.5 percent in June.


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