The major market indexes ran out of steam on the last day of a strong month, dragged down by a second-quarter revenue miss from e-commerce giant Amazon.com (AMZN, -7.6%) and rising concerns over the spread of the delta variant of COVID-19.
Wall Street also weighed the latest round of economic data, which showed personal income and spending rebounding in June (+0.1% and 1.0%, respectively), while the personal core expenditures (PCE) index – the Federal Reserve's preferred measure of inflation – rose a slimmer-than-expected 0.4% month-over-month.
"Core prices are still running hot but have decelerated in the past two months," says Sal Guatieri, senior economist at BMO Capital Markets. "This will give the Fed some comfort in its transitory story."
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At the close, the Dow Jones Industrial Average was down 0.4% at 34,935, the S&P 500 Index gave back 0.5% to 4,395 and the Nasdaq Composite shed 0.7% to 14,672. For all of July, though, the three indexes notched solid gains – Dow +1.3%, Nasdaq +1.2%, S&P +2.3% – with the latter nabbing its sixth straight monthly advance.
Other news in the stock market today:
- The small-cap Russell 2000 fell 0.6% to 2,226.
- Pinterest (PINS) slumped 18.2% after earnings. For its second quarter, the do-it-yourself (DIY) social media firm posted stronger-than-expected adjusted earnings of 25 cents per share on $613 million in revenues. But monthly active users came in at a lower-than-anticipated 454 million, which was also 5% below what the company reported in the first quarter.
- Capri Holdings (CPRI) was a big earnings winner, ending the day up 12.5%. In its second quarter, the apparel maker formerly known as Michael Kors reported adjusted earnings per share of $1.42 on $1.3 billion in revenue. Both figures were above what analysts were expecting.
- U.S. crude oil futures gained nearly 0.5% to end at $73.95 per barrel. For the week, black gold added 2.6%, and finished the month up roughly 0.7%.
- Gold futures shed 1% to settle at $1,817.20 an ounce. The malleable metal gained 0.9% on the week and 2.6% for the month.
- The CBOE Volatility Index (VIX) rose 3.1% to 18.24.
- Bitcoin was a hair lower at $39,729.29. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)
It's Not Time to Get Complacent
This is according to Chris Zaccarelli, chief investment officer for Independent Advisor Alliance. With the Cboe Volatility Index close to the bottom of its 52-week range and interest rates near record lows, there's certainly the feeling that the market can only go up from here.
However, "Whether it's a growth scare, a reaction to the Federal Reserve's taper plan or a less obvious catalyst, the market is likely to drop sharply before the end of the year," he warns. "The key is to remain calm when the drop comes and to take the time now to make sure your portfolio is in good shape."
Investors who want to add more safety and stability to their portfolios may want to explore this list of high-quality stocks with dividends of over 4%, which can provide a cushion against any potential market pullbacks.
Additionally, real estate investment trusts (REITS) and consumer staples stocks are often considered yield-friendly safety plays, while buy-and-hold investors may want to check out this list of high-return stocks that have a history of delivering outsized gains. These picks come from a wide variety of sectors and have compelling bull cases indicating they could continue to be high-return investments for those willing to wait out any possible short-term bumps in the road.
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