By Sinéad Carew and Iain Withers
NEW YORK/LONDON (Reuters) -U.S. equities edged lower on Friday, a day after the S&P 500 and the Nasdaq scored record closes, as investors looked ahead to corporate earnings and digested economic data, while the dollar weakened and U.S. Treasury yields fell.
U.S. consumer sentiment improved in July and inflation expectations declined, but households still saw substantial risk of price pressures increasing in the future, the University of Michigan’s Surveys of Consumers released on Friday showed.
Another report showed U.S. single-family homebuilding dropped to an 11-month low in June as high mortgage rates and economic uncertainty hampered home purchases, suggesting residential investment contracted again in the second quarter.
On Thursday, news of stronger-than-expected U.S. retail sales and jobless claims data suggested modest improvements in economic activity, helping to push equities higher.
Still, many investors were focused on positive expectations for corporate earnings and making bets ahead of the expiration of July equity options, said Bruce Zaro, managing director at Granite Wealth Management in Plymouth, Massachusetts.
“Today’s action is all about option expiration as investors make bets on the meat of earnings season, which comes in the next few weeks when all the growth and technology companies report,” said Zaro, noting that beyond earnings, investors want to benefit from a strong performance trend in megacap names. “There’s a fear of missing out.”
A solid start to the U.S. earnings season – with companies including streaming giant Netflix beating forecasts – is supporting investor confidence, said Eren Osman, managing director of wealth management at Arbuthnot Latham, noting he was “pretty constructive on the (U.S.) macro backdrop.”
Alphabet and Tesla are among the companies reporting half-year results next week, which will further test the market.
On Wall Street as of 11:12 a.m. ET, the Dow Jones Industrial Average fell 173.00 points, or 0.39%, to 44,310.88, the S&P 500 fell 3.55 points, or 0.05%, to 6,293.90 and the Nasdaq Composite fell 8.68 points, or 0.03%, to 20,878.31.
MSCI’s gauge of stocks across the globe rose 1.57 points, or 0.17%, to 927.86 while the pan-European STOXX 600 index was flat.
The U.S. dollar slipped on the day but was still angling for a weekly gain, as investors weighed signs that tariffs may be starting to fuel inflation pressures and monitored Federal Reserve policy as U.S. President Donald Trump increases pressure on Chair Jerome Powell.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.28% to 98.23.
The euro was up 0.51% at $1.1654 while Sterling strengthened 0.23% to $1.3446.
Against the Japanese yen, the dollar weakened 0.15% to 148.37 as polls showed Japanese Prime Minister Shigeru Ishiba’s coalition was in danger of losing its majority in the upper house election on Sunday.
In Treasuries, the benchmark U.S. 10-year note yield fell 3 basis points to 4.434%, from 4.463% late on Thursday. The 30-year bond yield fell 1 basis point.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 4.8 basis points to 3.869%, from 3.917% late on Thursday.
Fed Governor Christopher Waller said on Thursday he continued to believe the U.S. central bank should cut interest rates at the end of this month, though most officials who have spoken publicly have signaled no desire to move.
In commodities, crude oil futures rose on Friday as investors weighed new European Union sanctions against Russia.
U.S. crude rose 0.53% to $67.91 a barrel and Brent rose to $69.83 per barrel, up 0.45% on the day.
Gold prices rose on Friday as a weaker U.S. dollar and ongoing geopolitical and economic uncertainty boosted demand for the safe-haven metal, while platinum prices eased after reaching their highest level since 2014. Spot gold rose 0.5% to $3,355.34 an ounce.
(Reporting by Sinéad Carew in New York, Iain Withers in London, Stella Qiu in Sydney; Editing by Toby Chopra and Mark Potter)
