Equities sold off across the board Friday amid pandemic worries, with mega-caps leading the decline after disappointing quarterly results. The Dow Jones industrial index declined 0.6 percent, the S&P 500 fell 1.2 percent, and the NASDAQ dropped 2.5 percent.
Apple fell 5.6 percent after reporting weaker-than-expected iPhone sales. Netflix dropped 5.7 percent after announcing slower growth and warning about ad spending.
Other momentum leaders declined, with Tesla off 5.6 percent, Facebook down 6.3 percent, and Microsoft down 1.1 percent. Amazon dropped 5.5 percent on big fourth-quarter cost increases. Google managed to rise 3.4 percent as the market focused on better ad spending.
Among sectors, holding up best but still weaker were financials, materials, and consumer staples. Worst off were tech, communications services, and consumer discretionary.
In US economic data, personal income rose 0.9 percent to come in near the top of Econoday's consensus range. Personal consumption expenditures were also at the top of the range, up 1.4 percent reflecting strong gains for apparel and new vehicles.
These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 44 cents to US$37.46 while spot gold rose US$16.99 to US$1,878.16. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield rose 6 basis points to 1.66 percent while the 10-year note yield rose 4 basis points to 0.87 percent.
Surprisingly positive corporate earnings and positive economic data bolstered equities Friday but European lockdowns kept the market in check. The Europe-wide STOXX 600 rose 0.2 percent, the German DAX declined 0.4 percent, while the French CAC gained 0.5 percent, and the UK FTSE-100 eased 0.1 percent.
On the data front, Eurozone GDP beat expectations in the third quarter but reaction was modest as markets focused on the slowdown under way in the fourth quarter, and expected to be exacerbated by lockdowns in Germany, France, and elsewhere as Europe retakes its position as epicenter of the pandemic. On the positive side, investors noted reports that UK authorities are accelerating reviews of Covid-19 vaccines from Pfizer and AstraZeneca-Oxford.
On the earnings front, financials were winners, with NatWest Group up 6.0 percent after reporting loan impairments far below expectations. Banco Bilbao Vizcaya gained 4.0 percent and Banco de Sabadell gained 2.9 percent after earnings beats. Swiss Re, the insurer, rose 3.5 percent, as the market approved its reserve plans against pandemic-related claims.
Energy stocks outperformed, with Total SE rising 2.8 percent after an earnings beat, and Royal Dutch Shell up 3.9 percent after Thursday's promise to boost dividends. IAG, owner of British Airways, rose on the company's quarterly results and new cost cuts. Saint-Gobain, the French materials giant, rose 4.7 percent after a revenues beat.
In economic data, Eurozone GDP rose 12.7 percent in third-quarter flash, well above expectations and fully reversing second-quarter virus contraction of 11.8 percent. But the quarterly jump couldn't pull the year-over-year rate, at minus 4.3 percent, into the positive column, though here too the result was better than expected.
Major Asian markets closed lower Friday, extending losses on the week, with rising global Covid-19 cases and uncertainty about the outcome of next week's US elections likely the main factors weighing on regional investor sentiment. Australia's All Ordinaries index outperformed on the day with a decline of 0.6 percent but was among the weaker regional performers on the week, closing down 3.8 percent. Japan's Nikkei and Topix indices fell 1.5 percent and 2.0 percent respectively on the day and dropped 2.3 percent and 2.8 percent respectively on the week. Hong Kong's Hang Seng index fell 1.9 percent on the day and 3.3 percent on the week, while the Shanghai Composite index dropped 1.5 percent on the day and 1.6 percent on the week.
Japan's industrial production index rose 4.0 percent on the month in September, the fourth consecutive increase after revised growth of 1.0 in August and well above the consensus forecast for an increase of 3.1 percent. Output of motor vehicles and production machinery increased, partly offset by declines in the output of general-purpose and business-oriented machinery. In year-on-year terms, the index fell 9.0 percent after dropping a revised 13.8 percent in August.
Japanese labor market data for September, however, showed ongoing weakness as the economic impact of the Covid-19 pandemic continued. The seasonally-adjusted unemployment rate was unchanged at 3.0 percent in September, its highest level since May 2017, while the number of unemployed persons rose by 420,000 on the year after increasing 490,000 previously. The number of employed persons fell by 790,000 on the year in September after dropping 750,000 in August.