(Reuters) – A five-day rally in U.S. stocks ran out of steam on Friday as investors booked profits and reset their positions ahead of the earning season set to begin next week.
FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2019. REUTERS/Brendan McDermid
The technology and trade-sensitive stocks, which led the rally, took a beating and dragged the S&P 500 and the Nasdaq lower. Microsoft Corp (MSFT.O) fell 1.1 percent and Amazon.com Inc (AMZN.O) dropped 0.3 percent.
At the end of a solid week that lifted the S&P 500 .SPX by 10 percent from its 20-month lows hit around Christmas, all the 11 major S&P sectors were trading lower.
“We’ve run up and people seem to be in a wait-and-watch mode before they put more money back in,” said Mark Grant, chief global strategist at B. Riley FBR Inc in Fort Lauderbale, Florida.
Big banks will kick off the fourth-quarter earnings next week and investors will keenly look for signs of a slowdown in economic growth, a concern that led to a selloff in stocks in the final quarter of 2018.
S&P 500 companies, on average, are seen posting 14.5 percent growth in profit as they report December-quarter results, according to IBES data from Refinitiv.
However, expectations for growth in 2019 are at 6.4 percent, down from 7.3 percent on Jan. 1.
General Motors (GM.N) shares surged 8.3 percent after the No.1 U.S. automaker said it expects 2018 earnings per share to exceed its prior estimates and forecast upbeat profit for 2019. Shares of Ford Inc (F.N) also rose 1.6 percent.
Data showed U.S. consumer