Stocks ended their first positive week in four with a down day on Friday as investors were reluctant to buy going into a long weekend, with uncertainty still swirling around Europe. An S&P index of industrial shares .GSPI ranked among the session’s biggest losers while weakness in large-cap tech stocks like Google Inc (GOOG.O) kept the Nasdaq in negative territory.
Warnings about Greece kept investors cautious, as did Spain after Standard & Poor’s downgraded five banks and a source told Reuters that Bankia (BKIA.MC) asked for $24 billion in state aid. However, a bullish read on U.S. consumer sentiment kept pessimism in check.
Boeing Co (BA.N) and Chevron Corp (CVX.N) were the Dow’s biggest decliners, followed by Caterpillar Inc (CAT.N), with each falling more than 1 percent in the thinly traded session. Google fell 2 percent to $591.53, pressuring the Nasdaq.
Utilities .GSPU and telecom .GSPL were the only S&P sectors in positive territory. Both are deemed defensive plays. “The market is drifting and cautious ahead of the (Memorial Day) holiday. There’s no consistency, though we do seem to be digging in after some bad weeks,” said Donald Selkin, chief market strategist at National Securities in New York, which has about $3 billion in assets under management. “Still we have the overhang of Europe, and just have to hope things don’t get worse over there.” Belgium’s Deputy Prime Minister Didier Reynders issued a warning over Greece, saying it would be a “grave professional error” if central banks and companies were not preparing for a Greek exit from the euro zone.
French banks, which are among the lenders most exposed to Greece, have stepped up their efforts on contingency plans for the debt-laden country leaving the euro zone, sources familiar with the situation said. The Dow Jones industrial average .DJI fell 74.92 points, or 0.60 percent, to 12,454.83 at the close. The Standard & Poor’s 500 Index .SPX dipped 2.86 points, or 0.22 percent, to 1,317.82. The Nasdaq Composite Index .IXIC was down 1.85 points, or 0.07 percent, at 2,837.53. The U.S. stock market will be closed on Monday for the Memorial Day holiday.
For the week, the S&P 500 rose 1.7 percent. That advance broke the benchmark index’s a three-week string of losses with its best weekly performance since mid-March. The Dow added 0.7 percent for the week, while the Nasdaq climbed 2.1 percent. Trading was choppy all week, with volatility often spiking around the close.
Even with the S&P 500’s 5.7 percent drop since the end of April, stocks have held up relatively well as bear markets rage in Brazil, Russia, peripheral Europe, and many core European equity markets have given up all their gains for the year. For the year to date, the S&P 500 is still up 4.8 percent. The S&P 500’s top gainer in Friday’s session was telecom services – a sign that investors were looking for safety in defensive U.S. sectors, possibly as money returns from riskier emerging markets and Europe. The S&P telecoms index .GSPL rose 0.3 percent.
At the end of last week, the S&P 500 tested support at the 1,290 mark and has inched away from that level during the week. Some analysts are expecting the benchmark index to test its 200-day moving average at 1,281 and possibly fall below that.
Weighing heavily on the Dow in Friday’s session, Boeing shares lost 1.9 percent to end at $70. Chevron’s stock dropped 1.2 percent to $98.86. Caterpillar shares shed 1.6 percent to close at $89.94. Chesapeake Energy Corp (CHK.N) gained 1.5 percent to $15.81, rising for the second day after the company announced it has put a half-million acres in Wyoming and Colorado up for sale. Data showed Thomson Reuters/University of Michigan Surveys of Consumers’ final May consumer sentiment index jumped to 79.3 from 77.8 in the preliminary May report. It was the highest level since October 2007. Market reaction was muted.
In the aftermath of last Friday’s botched initial public offering of Facebook (FB.O), lead underwriter Morgan Stanley (MS.N) will adjust thousands of trades to ensure outstanding limit orders to sell will be filled at no more than $42.99 a share, the firm told its brokers on Thursday, according to several who listened to the call. Facebook’s stock lost 3.4 percent to $31.91, close to its all-time intraday low of $30.94 that it hit on Tuesday. Volume was light, with about 4.78 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year’s daily average of 7.84 billion. About half of the stocks listed on both the New York Stock Exchange and Nasdaq closed in positive territory.
