Wall Street ended a mixed week with some more losses, as investors comb through poor earnings data.
MANHATTAN (CN) — Investors have had no shortage of bad news this week, from poor corporate earnings to reignited tensions with China that has the U.S embassy in Chengdu facing closure.
As a result, equity markets have had a mixed week and closed on a sour note on Friday, with the Dow Jones Industrial Average losing 182 points and the S&P 500 dropped 0.6%. The Nasdaq has ceased to be a bastion of good news, losing nearly 1%, as even tech stocks have begun to falter.
Conversely, investors seeking safe haven have found it in gold. By midday, the precious metal traded at more than $1,900 per ounce, its sixth day of consecutive gains. “The bearish trend of the U.S. dollar has helped the metal, as the inverse relationship between the two has been strong lately.” wrote David Madden, a market analyst at CMC Markets, in an investor’s note. “Should gold’s bullish trend continue, it might retest the $1,920 area—the record high.”
Gold settled at $1,899 per ounce by the closing bell, but some think it could go even higher this year as the economic and geopolitical landscape remains rocky.
Joe Cavatoni, managing director of the World Gold Council, said a lot of the reason for gold increasing in price is due to the near-zero interest rates set by central banks worldwide, as well as record levels of activity in exchange-traded funds.
“Our expectation continues to be that gold as an investment is going to be very, very much front and center and a key component of what people are looking at between now and the end of the year and beyond,” he said during a Thursday investor’s call.
Investors have had a rough week, from spiking unemployment claims to a poor earnings season showing deep gashes in revenue and income.
In its earnings release on Friday, American Express reported a $3.1 billion drop in revenue from the second quarter of 2019 to last quarter. Net income for the credit card company was even worse, falling 85% year over year, from 1.7 billion in Q2 2019 to $257 million last quarter.
While all of the company’s segments reported losses, its global merchant and network services silo saw a huge drop in income, from $564 million a year ago to $66 million in Q2 2020.
Technology leader Intel offered mixed results to investors, posting a 20% increase in revenue during the second quarter and a 22% increase in net income, from $4.2 billion a year ago to $5.1 billion last quarter. Its 3Q guidance expects 4% growth in the business.
“It was an excellent quarter,” said CEO Bob Swan in a statement. “Well above our expectations on the continued strong demand for computing performance to support cloud-delivered services, a work- and learn-at-home environment, and the build-out of 5G networks.”
Investors were irked, however, by news that the company was postponing its next generation of 7-nanometer chips. Originally the chips were going to release in early 2021, but the company noted production of the chips could be delayed until 2022 or 2023.
Some companies did better than expected. Verizon posted a quarterly profit — the company made $4.8 billion in net income last quarter compared with $4 billion a year ago — and slightly diminished revenues, at $32 billion a year ago to $30 billion last quarter.
“Through extraordinary circumstances, Verizon delivered a strong operational performance in the second quarter,” CEO Hans Vestberg said in a statement, noting that, despite the unavoidable loss of in-store sales, the company has a stalwart subscriber base.
Honeywell also beat analyst expectations by posting a 19% drop in revenues, from $9.2 billion a year ago to $7.4 billion last quarter. While the industrial company’s sales dropped 19% in the second quarter and most of its segments took a hit, Honeywell’s safety and productivity solutions business saw a 12% increase in profitability year over year.
Some good news surprised investors, however, as new home sales last month were stronger than expected. According to the Census Bureau, more than 776,000 new houses were sold last month, slightly above the amount sold in January before lockdowns and the highest since July 2007.