U.S. Stock ETFs Continue to Slip as Earnings Dampen Mood

U.S. markets and stock ETFs were under pressure Thursday as a mixed bag of earnings dampened the mood on Wall Street.

On Thursday, the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 0.3% and SPDR S&P 500 ETF (NYSEArca: SPY) was flat.

With the second quarter earnings season getting into full swing, the three major U.S. benchmarks have pulled back from record highs and are one pace for their worst weekly drop in seven weeks.

Dragging on the growth sentiment, Netflix revealed a surprise decline in U.S. subscribers and missed targets for new subscribers overseas.

“The stock market seems to be running out of energy,” John Augustine, chief investment officer of Huntington Private Bank, told Reuters. “Earnings have met expectations but companies are being cautious about future quarters, which is something that’s not able to keep the S&P 500 above the 3,000 level.”

Looking ahead, Refinitiv IBES data suggests that S&P 500 company profits are expected to rise 0.6% this year.

Further weighing on sentiment, investors were looking for favorable developments in trade talks between the U.S. and China, along with the highly anticipated Federal Reserve policy meeting at the end of July where the central bank is expected to finally cut interest rates.

Trade talks have stalled while the Trump administration determines how to address Beijing’s demands that it eases restrictions on Huawei Technologies, the Wall Street Journal reports. No face-to-face meetings have been scheduled since President Donald Trump and Chinese President Xi Jinping met last month in Japan.

“Markets don’t seem to be taking the comments on trade tensions very well,” Fritz Louw, a currency analyst for Mitsubishi UFJ Financial Group, told the WSJ, adding that we will likely witness several days of volatility as markets wait on progress in trade talks between China and the U.S.

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