U.S. Stocks Give Back Ground After Seeing Initial Strength

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After moving to the upside at the start of trading on Friday, stocks have given back ground over the course of the morning. The major averages have pulled back well off their initial highs, with the Dow and the S&P 500 sliding into negative territory.

Currently, the major averages are turning in a mixed performance. While the Nasdaq is up 29.42 points or 0.3 percent at 10,617.23, the Dow is down 171.99 points or 0.7 percent at 26,141.66 and the S&P 500 is down 11.59 points or 0.4 percent at 3,234.63.

The initial strength on Wall Street partly reflected a positive reaction to better than expected quarterly results from leading technology companies.

Shares of Apple (AAPL) have moved sharply higher after the tech giant reported better than expected fiscal third quarter results and announced a 4-for-1 stock split.

Amazon (AMZN) and Facebook (FB) are also posting substantial gains after reporting quarterly results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, Google parent Alphabet (GOOGL) has come under pressure despite reporting better than expected second quarter results. The company did report its first-ever quarterly drop in revenue.

The early buying interest was partly offset by concerns about stalled negotiations over a new coronavirus stimulus package.

With the Republican-controlled Senate adjourning for the weekend on Thursday, a $600 weekly federal unemployment benefit is set to expire at the end of the day.

Democrats rejected a temporary extension of the jobless benefit, with Senate Minority Leader Chuck Schumer claiming a one-week extension "can't be implemented in time."

Lawmakers appear at an impasse as the attempt to reach a compromise between a $1 trillion GOP relief proposal and the $3.4 trillion bill passed by the Democratic-controlled House in May.

A sharp drop by Chevron (CVX) is also weighing on the Dow, with the energy giant plunging by 4.7 percent after reporting a wider than expected second quarter loss.

Shares of Caterpillar (CAT) have also moved significantly lower even though the heavy equipment maker reported second quarter results that beat analyst estimates.

On the U.S. economic front, the Commerce Department released report showing personal income slumped by more than expected in the month of June, although the report also showed another substantial increase in personal spending.

The Commerce Department said personal income tumbled by 1.1 percent in June after plunging by a downwardly revised 4.4 percent in May.

Economists had expected personal income to decrease by 0.5 percent compared to the 4.2 percent nosedive originally reported for the previous month.

Meanwhile, the report said personal spending surged up by 5.6 percent in June after skyrocketing by an upwardly revised 8.5 percent in May.

Personal spending had been expected to jump by 5.5 percent compared to the 8.2 percent spike originally reported for the previous month.

A separate report from the University of Michigan showed consumer sentiment deteriorated by more than initially estimated in the month of July.

The report said the consumer sentiment index for July was downwardly revised to 72.5 from the preliminary reading of 73.2. The index is down from 78.1 in June and below economist estimates for a reading of 73.0.

"Consumer sentiment sank further in late July due to the continued resurgence of the coronavirus," said Surveys of Consumers chief economist Richard Curtin.

Airline stocks have moved sharply lower over the course of the morning, dragging the NYSE Arca Airline Index down by 3 percent to its lowest intraday level in two months.

Substantial weakness has also emerged among steel stocks, as reflected by the 2.1 percent slump by the NYSE Arca Steel Index.

Biotechnology stocks are also seeing considerable weakness on the day, with the NYSE Arca Biotechnology Index falling by 1.8 percent.

Gilead Sciences (GILD) is posting a notable loss after reporting second quarter results that missed analyst estimates on both the top and bottom lines.

Energy, financial, semiconductor and software stocks have also come under pressure, while significant strength is visible among gold stocks.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Friday, although China's Shanghai Composite Index bucked the downtrend and advanced by 0.7 percent. Japan's Nikkei 225 Index plunged by 2.8 percent, while Hong Kong's Hang Seng Index fell by 0.5 percent.

The major European markets have also moved to the downside on the day. While the German DAX Index is just below the unchanged line, the French CAC 40 Index is down by 0.6 percent and the U.K.'s FTSE 100 Index is down by 1 percent.

In the bond market, treasuries have shown a lack of direction over the course of the morning. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by less than a basis point to 0.549 percent.

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