* Durable goods data better than expected
* Visa, Amazon decline as earnings disappoint
* El Pollo Loco rallies in trading debut
* Indexes down: Dow 0.7 pct, S&P 0.5 pct, Nasdaq 0.5 pct
(Updates to close)
By Ryan Vlastelica
NEW YORK, July 25 U.S. stocks closed lower on
Friday in a broad consumer discretionary-led selloff after Visa
and Amazon, a pair of closely watched bellwether names, reported
While the S&P 500 found support at its 14-day moving
average, suggesting a recent positive trend in equities remains
intact, the day's decline was enough to erase the benchmark
index's gain for the week.
Earnings have largely been better than expected this season
in terms of both profit and revenue. However, there have been
high-profile disappointments, including Boeing Co and
Caterpillar Inc earlier this week.
Amazon.com Inc tumbled 9.6 percent to $324.01 as
the biggest drag on the S&P 500 after reporting an unexpectedly
big second-quarter loss due to greater expenses on investments.
About 17.8 million shares changed hands, nearly five times its
50-day average of 3.6 million.
The online retailer weighed down the consumer discretionary
sector, which lost 1.2 percent.
Visa Inc was the Dow's largest decliner, down 3.6
percent to $214.77 after the world's largest credit and debit
card company cut its revenue forecast for the year.
As the costliest stock in the price-weighted
index, Visa accounted for about half the Dow's drop.
"The earnings season overall has been in line (with
analysts' estimates), but when companies with rich valuations
disappoint, you're going to get crucified," said Lawrence
Glazer, managing partner at Mayflower Advisors in Boston.
"Amazon and Visa are significant components of the overall
market and bellwethers of their respective industries. That
gives you pause."
Only two of the 10 primary S&P 500 industry sectors were
positive on the day. About 64 percent of stocks traded on both
the New York Stock Exchange and Nasdaq ended the day lower.
The Dow Jones industrial average fell 123.23 points,
or 0.72 percent, to 16,960.57, the S&P 500 lost 9.64
points, or 0.48 percent, to 1,978.34 and the Nasdaq Composite
dropped 22.54 points, or 0.5 percent, to 4,449.56.
For the week, the Dow is down 0.8 percent, the S&P is flat
and the Nasdaq is up 0.4 percent in its second straight weekly
About 4.95 billion shares traded on all U.S. platforms,
according to BATS exchange data, below the month-to-date average
of 5.56 billion.
Starbucks fell 2.1 percent to $78.74 even as
quarterly sales at established stores in its Americas region
grew a stronger-than-expected 6 percent.
Pandora Media dropped 10 percent to $25.75 after it
forecast adjusted profit below analysts' estimates for the
On the upside, Baidu was up 11 percent to $226.50.
China's biggest Internet search company blew past Wall Street's
targets with a 34.1 percent jump in quarterly net profit, helped
by a surge in mobile revenue.
El Pollo Loco Holdings Inc shares surged 60 percent
to $24.03 in their trading debut after the company's initial
public offering was priced at the high end of an expected range.
The stock was the biggest percentage gainer among Nasdaq stocks.
The market did not react to data showing orders for
long-lasting U.S. manufactured goods rose more than expected in
June, supporting hopes for a strong economic rebound in the
Goldman Sachs downgraded its global allocation to
equities to neutral on a short-term basis on Friday, even though
the brokerage remained overweight stocks for the longer term, it
said in a research note.
The firm said it was worried that a rise in rates would
drive stocks lower over the next three months, adding: "We also
expect the general pace of returns to slow compared to what we
have seen in the last couple of years."
Goldman said the global acceleration in economic growth is
"largely behind us and geopolitical risks are elevated." Still,
it said equities were the most attractive class on a 12-month
horizon "by a wide margin."
Equity markets worldwide have rallied steadily through the
year. The MSCI All-World Index hit a record in
early July, and has gained more than 5 percent in 2014.
Goldman noted that the gap between dividend yields and
government bond yields remained high, which suggests more
outperformance by the equity market.
Dividing the world up by regions, Goldman was overweight in
Europe and Japan and underweight in the United States. When
looking at specific sectors, the firm was high on growth
industries - it has overweight ratings for technology stocks in
the United States, Europe, Japan and Asia.
(Additional reporting by David Gaffen; Editing by Nick
Zieminski and Bernadette Baum)