US equity markets wrapped up a tough week of commodity and currency volatility fairly intact, but investors face data on the depressed housing sector next week almost certain to be grim.
Swings in oil prices and the dollar sparked risk aversion as investors grappled with conflicting signals about the strength of the us and global economic recovery.
Stocks pulled back from a sharp bull run that many observers said had left them overvalued.
The blue-chip Dow Jones Industrial Average dipped 0.34 percent from a week ago, closing on Friday at 12,595.75.
The S&P 500 index, a broader measure of the markets, lost 0.18 percent over the week at 1,337.77.
And the tech-rich NASDAQ Composite managed to eke out a 0.03 percent gain at 2,828.47.
“The good news is that the averages held up,” Marc Pado at Cantor Fitzgerald said. “It’s not the end of the bull market, but a rotation to get prepared for a pullback or a correction in the summer.”
With commodity markets nervous and the US dollar strengthening, the best-performing sectors in recent months found themselves in trouble: energy, basic materials, metals and mining.
“Money rotated into very defensive groups, the kind where you’d put your money if you were worried the economy was going to falter, so food, beverages, tobacco, pharmaceuticals, healthcare, non-durable products like soap all attracted buyers,” Pado said. “When those groups do very well, it’s not typically a positive,” he added.
The week’s two sharp falls on Wall Street, on Wednesday and Friday, came in tandem with a significant strengthening of the US dollar against the euro, as investors worried about the Greek sovereign debt crisis.
Markets were expected to focus on meetings of the eurozone and EU finance ministers tomorrow and Tuesday, where the Greek situation was seen as high on the agenda.
“We’re entering a period of extreme volatility because the data are sending mixed signals,” said Lindsey Piegza, an economist at FTN Financial.
Economic indicators published this week sparked little interest. Consumer prices rose as expected and the markets shrugged off a better-than-expected reading on consumer confidence from the University of Michigan.
Rising gasoline prices, up more than 30 percent from a year ago, factored heavily into the inflation number and took a bigger chunk out of Americans’ pocketbooks as retail sales growth slowed last month.
“Consumers are spending the same amount of dollars, but a majority of it is going at the pump,” Piegza said.
She said the rise in energy prices is “one of the biggest threats to the consumer sector right now,” and also was igniting inflation fears.
Next week’s indicators focus mainly on the housing market and industrial activity.
Data on housing construction starts and building permits for last month will be published on Tuesday. The number of sales of previously owned homes, the lion’s share of the housing market, is set for Thursday.
“Nobody expects to get some good news” on the housing market, Pado said.
Investors also are awaiting the minutes from the last US Federal Reserve policy-setting meeting on Wednesday. The central bank left ultra-low interest rates unchanged for some time in a bid to shore up the economy’s fragile recovery from recession.