“I think the overarching driver for change may be the macro, not the micro,” said Art Hogan, chief market strategist at Wunderlich Securities.
“It’s been a week characterized by lackluster earnings with a few bright spots here and there,” he said. “Away from that you’ve got this overarching concern that the global economy is slowing down.”
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Overnight, the Caixin Markit flash general manufacturing PMI for July came it at 48.2, a 15-month low. The July euro zone flash PMI was 52.2, a two-month low.
“You’ve got some major growth concerns and that is what’s weighing on investors minds,” said Peter Boockvar, chief market strategist at The Lindsey Group. He noted that earnings and data have mostly indicated softer growth, outside of encouraging reports from Google, Netflix and Amazon.
European stocks traded lower and Asian stocks closed in the red, with metals falling further and gold hitting a fresh five-year low. The precious metal held near $1,081 an ounce in early trade. Crude also reversed initial gains to trade lower.
The major averages are on track for sharp weekly losses. The Dow transports traded lower, failing to recover from correction territory.
“You’ve got a situation here where the market is forecasting weaker economic growth, not stronger,” said Adam Sarhan, CEO of Sarhan Capital. “That directly contradicts the Fed’s narrative.”
The Federal Open Market Committee holds its July meeting next week but no press conference is scheduled.
The U.S. flash manufacturing PMI for July edged up to 53.8, from a 20-month low hit in June. New home sales showed a decline of 6.8 percent to a seven-month low in June.
“The new home sales number are often a very volatile figure and we’ve seen a strong uptrend over the last couple of months,” said Brad Friedlander, co-founder of Angel Oak Capital Advisors, which as $5 billion in assets under management. He pointed out that the figure is still up about 20 percent from the same month last year.
Starbucks and Visa also traded at all-time highs after beating on both the top and bottom line.
Those quarterly reports stand out from mostly lackluster earnings on Thursday that pushed U.S. markets broadly lower.
Among the firms posting results before the open, Biogen Idec beat on earnings but missed on revenue, as well as lowered full-year guidance.
American Airlines posted earnings that topped expectations on revenue a touch below forecasts. The airline also announced the authorization of an addition $2 billion in share buybacks.
VF Corp., the maker of North Face, Wrangler, and other apparel brands, posted earnings that beat on both the top and bottom lines. The firm also raised its full-year outlook.
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In dealmaking news, Anthem said on Friday it would buy Cigna in a deal valued at $54.2 billion, creating the largest U.S. health insurer by membership.
The Dow Jones Industrial Average traded 56 points lower, or 0.31 percent, at 17,676, with American Express leading decliners and Visathe greatest gainer.
The S&P 500 traded down 7 points, or 0.33 percent, at 2,095, with health care leading six sectors lower and consumer discretionary the greatest advancer.
The Nasdaq traded down 4 points, or 0.09 percent, at 5,141.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, climbed above 13.
About two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 208 million and a composite volume of 919 million in late morning trade.
High-frequency trading accounted for 49 percent of July-to-date’s daily trading volume of about 6.6 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.
The dollar traded higher, with the euro at $1.096 and the yen at 123.7 yen against the greenback.
Treasury yields were little changed, with the 10-year yield at 2.27 percent and the 2-year just below 0.70 percent.
Crude oil futures for September delivery fell 19 cents to $48.26 a barrel on the New York Mercantile Exchange. Gold futures fell $12.50 to $1,081.50 a barrel as of 10:55 a.m.