Wall Street edges lower as value, growth stocks fall; defensives gain

Wall Street’s main indexes fell on Friday, with growth and value stocks falling as investors turned risk-averse towards the end of the week, while gains in defensive parts of the market kept declines at bay.

Markets have largely cheered a steady recovery in the labor market this year, but concerns about higher inflation due to a faster-than-expected rebound has hurt sentiment, with investors oscillating between “value” and tech-heavy “growth” names in the past few sessions.

Economy-sensitive S&P 500 energy, financials and industrials led declines among the 11 major sector indexes by afternoon trading. The energy sector is down over 6 per cent so far for the week.

Technology stocks also fell on Friday, while defensive utilities, consumer staples and real estate gained. Real estate also hit a record.

“It’s been hard for the market to gain here from these already elevated prices,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“Investors are more concerned right now about missing the upside of this market than they are about a sell off. In the near term, all they’re really doing is shifting between stocks and not taking money out of the overall market.”

Data from the Commerce Department showed retail sales rebounded 0.6 per cent last month, as spending is shifting back to services, bolstering expectations that economic growth accelerated in the second quarter.

After earnings from big banks this week, focus will shift to quarterly results from technology-focused companies including International Business Machines Corp, Netflix Inc , Verizon Communications, AT&T, Intel Corp , Snap Inc and Twitter Inc.

“We got a lot of optimism for the earnings, but then you’ve got fear of inflation and that’s kind of giving us a whipsaw market,” said Dennis Dick, a proprietary trader at Bright Trading LLC.

“The tech earnings starting next week can make the market forget about those fears (inflation).”

At 12:18 p.m. ET, the Dow Jones Industrial Average was down 56.65 points, or 0.16 per cent, at 34,930.37, the S&P 500 was down 4.83 points, or 0.11 per cent, at 4,355.20 and the Nasdaq Composite was down 12.88 points, or 0.09 per cent, at 14,530.25.

Moderna Inc jumped 7.9 per cent to scale new highs after S&P Dow Jones Indices said the drugmaker will join the S&P 500 index as of the start of trading on July 21, replacing Alexion Pharmaceuticals.

Cintas Corp rose 3.8 per cent to the top of the S&P 500 index after brokerages raised their price targets on the business service provider’s stock following its fourth-quarter results.

Didi Global Inc fell 3.4 per cent as China sent state officials from at least seven departments to the ride-hailing giant for a cybersecurity review.

Declining issues outnumbered advancers for a 1.18-to-1 ratio on the NYSE and a 1.02-to-1 ratio on the Nasdaq.

The S&P index recorded 47 new 52-week highs and no new low, while the Nasdaq recorded 37 new highs and 77 new lows.

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