Dow closes roughly 400 points higher, but snaps four-week win streak

Stocks rose on Friday, but ultimately capped off the week with losses.

The Dow Jones Industrial Average gained 401.97 points, or 1.26%, to close at 32,403.22. The S&P 500 advanced 1.36% to settle at 3,770.55, and the Nasdaq Composite rose 1.28% to finish at 10,475.25.

All the major averages closed lower for the week. The Dow shed 1.4% after four consecutive weeks of gains. The S&P and Nasdaq fell 3.35% and 5.65%, respectively, to break two-week winning streaks.

— Samantha Subin

A “massive bifurcation” is underway between mega-cap technology stocks and the rest of the market, says Andrew Slimmon, senior portfolio manager at Morgan Stanley Investment Management.

Many popular technology stocks have sold off sharply in recent days on disappointing earnings results and forecasts. Despite the downdraft in their valuations, Slimmon says to steer clear of many of these names as earnings need to come down. Most are also trading at a premium to the rest of the market.

Instead, Slimmon points investors to stocks he’s confident will continue to make their numbers even in a slowing economy. These sectors have also cut estimates and trade at low-teen or high-single-digit multiples.

One area he views positively is home-building stocks and home retailers that have been adversely affected by mortgage rates, but are expected to recover from current levels.

“Those groups really started to break down in the fourth quarter last year in anticipation that rates would be moving up,” he said. “I think, ultimately, the economy’s going to slow, and it won’t be great for the housing market, but mortgage rates could start to come back down.”

— Samantha Subin

Morgan Stanley is staying “fundamentally bearish,” saying leading indicators show further deterioration ahead.

The firm recommended being overweight on utilities, health care and real estate. Meanwhile, it listed discretionary and hardware as sectors investors should be underweight on.

But the firm did note a Fed pivot could come “sooner rather than later” and that there is the potential for a further rally to between 4,000 and 4,150 points before what it called “the next leg of this bear market,” which would come in between 3,000 and 3,200 points.

Corporate earnings were being watched carefully, as the firm said the “weak macro” environment has been a main talking point among companies. It also noted average valuation is trending lower as cuts to companies’ earnings per share begin.

However, the firm said multiple major indexes, including the S&P 500, saw rebounds in October.

— Alex Harring

It finally happened.

After falling for several months, analysts’ expected growth rate for fourth quarter S&P 500 earnings has turned negative. Profits…