Stocks swing between gains, losses over consumer sentiment

U.S. stocks swung between gains and losses after a drop in consumer sentiment raised concern about the reopening of the economy. Crude oil declined and the dollar weakened.

The S&P 500 edged higher, led by gains in utilities, health care and materials, while communication services and energy sectors slumped. Netflix Inc. sank as much as 8% after saying it expects to sign up just half the 5 million subscribers Wall Street expected in the third quarter. A University of Michigan survey showed U.S. consumer sentiment slumped in July, missing all forecasts, after the resurgent coronavirus nearly wiped out any emerging optimism around reopenings.

“There are a lot of cross currents,” said John Porter, chief investment officer of equities at Mellon Investments. “You’ve had such an incredible run in the growth stocks relative to value. It certainly sets the stage of a sell-on-the-news reaction. They seem to have almost unfulfillable expectations built into these prices short term. Every issue in the market, the answer to the problem seems to be technology.”

Investors are closely watching to see how the broader technology sector reacts to Netflix’s weaker outlook. The Nasdaq Composite has managed to go two months without posting back-to-back declines, but that’s now under threat as investors question the resilience of tech’s searing rally.

In Europe, traders are holding out hope for policy makers to conclude a stimulus pact. German Chancellor Angela Merkel raised doubts on Friday that European Union leaders would be able to agree this week on a landmark $855 billion (750 billion-euro) recovery fund to help their economies heal from the pandemic. Positive earnings from Daimler AG and Ericsson AB pulled carmakers and tech stocks higher.

Elsewhere, Chinese shares were steady after a more than 4% slide on Thursday, with investors assessing moves by policy makers to tame signs of exuberance.