Wall St flat as earnings offset inflation jitters

VIDEO: REUTERS

NEW YORK (REUTERS) - Wall Street closed nearly flat on Friday (April 27) as inflation worries and struggling technology and energy stocks were offset by an advance in the consumer discretionary sector led by Amazon.

The S&P 500 and the Nasdaq eked out small gains while the Dow Jones Industrial Average edged into negative territory by the end of the session.

All three major US indexes were down for the week at the end of a choppy session, ending two-week winning streaks.

"There's a ton of cross-currents going on in the market right now and consequently you get trading days like this where the market can't seem to make up its mind what it wants to do,"said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

Growth in the US economy slowed in the first quarter as consumer spending grew at its weakest pace in nearly five years, according to the Commerce Department. But a jump in wages and lower tax rates suggested the setback could be temporary.

The US Treasuries yield curve flattened as the growth data renewed bets that the Federal Reserve would continue hiking benchmark US interest rates to keep inflation in check.

Wages and salaries increased at their fastest pace in 11 years, according to a report from the Labour Department, adding to inflation jitters.

As companies warn of higher costs eroding margins, markets have fluctuated as investors focus on guidance in the face of the strongest quarterly profit growth in seven years.

"You've got investors grappling with a new environment of volatility and how to handle that," said Carlson. "That means a market like we have now, kind of manic-depressive, passive-aggressive."

The Dow Jones Industrial Average fell 11.15 points, or 0.05 per cent, to 24,311.19, the S&P 500 gained 2.97 points, or 0.11 per cent, to 2,669.91 and the Nasdaq Composite added 1.12 points, or 0.02 per cent, to 7,119.80.

More than half of the S&P 500 companies have reported first-quarter earnings already, 79.4 per cent of which have beat consensus estimates. Analysts now expect first-quarter earnings growth of 24.6 per cent, more than double expectations at the beginning of the year, according to Thomson Reuters data.

Amazon.com led the S&P 500 and the Nasdaq, helping them close in positive territory as the online retailer's shares rose 3.6 per cent on the heels of a blockbuster earnings report . Brokerage firms have begun to value the company in excess of $1 trillion.

Microsoft was up 1.7 per cent as the technology bellwether beat first-quarter expectations and grew its cloud computing services.

Following a profit miss, Exxon Mobil weighed on the S&P 500 and Dow Jones Industrial Average, falling 3.8 per cent.

Sprint jumped 8.3 per cent following a Reuters report that the wireless carrier and rival T-Mobile were finalising terms of a merger.

Seven of the 11 major S&P sectors were higher, with the defensive telecom and real estate sectors posting the biggest percentage gains, at 1.75 per cent and 1.32 per cent respectively.

The Exxon drop pulled the energy index down 1.2 per cent, the biggest percentage loser.

Advancing issues outnumbered declining ones on the NYSE by a 1.42-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favoured advancers.

The S&P 500 posted 17 new 52-week highs and seven new lows; the Nasdaq Composite recorded 60 new highs and 57 new lows.

Volume on U.S. exchanges was 6.13 billion shares, compared to the 6.62 billion average over the last 20 trading days.