Drop in GE Stock, Below Average Volume Drive U.S. Stock Indexes Lower Across the Board

U.S. stock index futures closed lower across the board on Friday on the heels of a sell-off in General Electric (GE). The Dow component reported better-than-expected quarterly results, but sellers drove the stock down more than 2 percent in reaction to a 12 percent year over year drop in sales. The report, released before the opening, set a negative tone for the session. Below average volume also contributed to the general weakness.

In the cash market, the benchmark S&P 500 Index settled at 2472.54, down 0.91 or -0.04%. The blue chip Dow Jones Industrial Average closed at 21580.07, down 31.71 or -0.15% and the technology-based NASDAQ Composite finished the session at 6386.29, down 3.71 or -0.06%.

GE was the biggest drag on the Dow. The average plunged more than 100 points early in the session before settling into a range.

Weaker industrials and energy stocks were the biggest drags on the S&P 500 Index.

The NASDAQ fell in sympathy with the Dow and S&P 500, ending its longest winning streak since February 2015.

Despite the news from GE, earnings from S&P 500 companies have largely outperformed expectations. There have been no major surprises, leading investors to say that if earnings continue to grow, stocks should keep moving higher.

According to FactSet, calendar second-quarter earnings have mostly exceeded expectations this far. With 20 percent of S&P 500 companies having reported, 73 percent have beaten expectations and 77 percent have beaten on sales.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil plunged on Friday in reaction to a report from Reuters, citing a firm that forecast OPEC supply, that supply for the oil cartel for July would increase 145,000 barrels per day from June.

Additionally, oil traders also squared positions ahead of the July 24 meeting in St. Petersburg, Russia between major OPEC and non-OPEC producers. On the agenda is a discussion of compliance of agreed production cuts and how to bring down inventory levels.

Gold

Gold futures finished higher on Friday while posting its biggest weekly gain in two months. The catalyst behind the rally this week was a surge in the Euro which pushed the U.S. Dollar to levels not seen since June 2016.

The precious metal was also helped by lower U.S. Treasury yields. They were pressured by concerns the Fed would pass on a third rate hike this year and lingering political problems surrounding the Trump administration. The Republican’s inability to pass health care reform also led some investors to believe there would be further delays in tax reform and increased infrastructure spending. Weaker equity prices also led to increased demand for lower-yielding gold.