Wall Street flat; GE leads industrials lower

GE, which dropped 2.2%, was the biggest loser on the Dow and the biggest drag on the S&P 500

US stocks were flat on Friday morning as disappointing results from industrials including GE dented investors optimism about earnings and prevented Wall Street from aiming for new highs.

GE, long considered a bellwether for the U.S. economy, dropped 2.2% to $31.85 after its report.

The stock was the biggest loser on the Dow and the biggest drag on the S&P 500. It led the industrials sector down 0.8%.

Another drag on the sector was Honeywell, falling 4.8% after it lowered its full-year sales forecast.

Boeing and Caterpillar fell more than 1%.

The S&P 500 and Dow are trading at record highs on upbeat sentiment over second-quarter corporate earnings, with analysts now expecting smaller profit declines and more companies topping those estimates.

However, disappointing reports from bellwethers such as Intel and GE over the past two days have sapped some of the momentum from the rally.

"The market is digesting a very strong post-Brexit rally," said Adam Sarhan, Chief Executive of Sarhan Capital.

"At this stage of the game, it deserves a bullish benefit of the doubt and has the right to just pause as investors assess a slew of earnings."

At 9:40 a.m. ET (1340 GMT), the Dow Jones Industrial Average was down 15.82 points, or 0.09%, at 18,501.41.

The S&P 500 was down 1.78 points, or 0.08%, at 2,163.39.

The Nasdaq Composite was down 7.98 points, or 0.16%, at 5,065.92.

Four of the 10 major S&P indexes were lower. The three defensive sectors, telecoms, utilities, consumer staples, were the top gainers.

Still, the S&P and the Nasdaq were on pace to mark their fourth-straight week of gains, while the Dow its third week.

Overall, analysts now expect earnings of S&P 500 companies to decline 3.3% in the quarter, less than the 5% drop estimated at the start of the earnings season.

Of the 103 S&P 500 companies that have reported as of Thursday, 67% have beaten estimates, slightly higher than the 63% over the whole of a typical quarter, according to Thomson Reuters data.

Advancing issues outnumbered decliners on the NYSE by 1,298 to 1,277. On the Nasdaq, 1,215 issues fell and 986 advanced.

The S&P 500 index showed 14new 52-week highs and no new low, while the Nasdaq recorded 31 new highs and six new lows.