Stocks Lose Steam Friday on Consumer Sentiment, Earnings

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Stock gains lost steam Friday. There were mixed messages on a coronavirus vaccine and lockdowns, while consumer sentiment and American Express earnings came in. 

Stocks were mixed, with the Dow Jones Industrial Average falling less than 0.1% and the S&P 500 gaining just 0.2%. In the morning, the S&P 500 had risen 0.9% while the 10 year treasury yield rose to 0.62%, before falling to 0.6% by midday, as the market turned less risk-on. 

Gilead Sciences  (GILD) - Get Report said, although its human testing of its Remdesivir vaccine for the virus showed poor results, the sample size was too small for the company to make any snap judgements. The stock still fell 0.24%.  

Negatively, President Trump says lockdowns could last longer than initially expected. 

While lockdowns are indeed in place, the $480 bill fiscal spending bill was passed by the House, which means small businesses will get more than $300 billion in new loans, after burning through the first batch quickly. Many are worried the programs aren’t large enough to keep businesses open, although the speed at which Congress is getting money into the economy is satisfactory to investors. 

Consumer sentiment fell to 71.8 for April from 89.1 in March. The April reading beat economists estimates of 67. Investors were well aware the data would be ugly and they are looking past a rough 2020 and pricing in what they see as a 2021 earnings rebound. 

Not helping sentiment was American Express’  (AXP) - Get Report earnings report. Adjusted earnings per share beat estimates, while revenue was flat year-over-year at $10.3B. The stock fell1%. Loan loss provisions were $2.6B and up 220% year-over-year. That’s the amount lenders set aside to receive for potential losses on credit from borrowers and it’s a negative future indication of the health of consumer balance sheets. 

As valuations stretch, the market has begun to trade cautiously. The S&P 500 is now down 2% for the week. 

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