US equities markets face an array of data this week on the state of the fragile economic recovery, which recent indicators show is hitting some fairly rough patches.
The market continues to trade in a narrow range, Michael James of Wedbush Morgan Securities said.
“The sentiment is equally balanced between those that believe the economy is trending further higher and those that believe that the economy is likely to fall from here,” he said.
In the near term, he said, the market is “slanted towards the negative side.”
The Dow Jones Industrial Average fell for the third week in a row, losing 0.66 percent over the week to close on Friday at 12,512.04 points.
The broader S&P 500 index slid 0.34 percent to 1,333.27 points, also its third week running of declines.
The NASDAQ -Composite index dropped 0.89 percent to 2,803.32 points.
The week saw a spate of disappointing indicators on the world’s largest economy, including worse-than-expected reports on industrial production, housing construction and sales of previously owned homes.
Debt concerns once again grabbed investors’ attention, with the US debt hitting its legal limit on borrowing on Monday after some lawmakers in Congress balked at raising the ceiling without cutting government spending.
In Europe, speculation mounted that Greece will have to restructure its huge debt despite a massive bailout from the EU and the IMF.
Fitch Ratings on Friday slashed Greece’s credit rating by three notches, citing the challenges of fixing the country’s finances.
Investors appeared hesitant amid growing risk, and a cautious tone was reinforced by the US Federal Reserve’s minutes of its April 26 and 27 policy-setting meeting of the Federal Open Market Committee.
The minutes revealed the committee participants’ discussions about normalizing monetary policy, which has been extremely accommodating for several years in a bid to support recovery from severe recession.
“Any time the Fed comes out and talks about exit strategy, even if that strategy may not be pursued in the immediate term, it makes the market nervous,” Gina Martin of Wells Fargo Securities said.
“We’ve certainly lost our upside momentum — you have to be fairly happy with the idea that the market has not fallen off more,” she said, adding she was “a little surprised” by the market’s resiliency.
“Investors are struggling with where else to put their money,” the analyst said. “It’s a tough call to make.”
Commodity prices have sharply fallen since the beginning of the month, and investors remain wary about the major currencies and the bond market, which is yielding tiny returns. In that context, equities have some allure.
Wall Street benefited in the middle of the week from a rebound on Wednesday in commodity prices as well as from some positive quarterly earnings, such as those from personal computer maker Dell.
Next week’s major indicators begin on Tuesday, with a report on new-home sales.
Orders for durable goods — big-ticket items expected to last at least three years — are due to land on Wednesday, followed the next day by the government’s second estimate of GDP growth in the first quarter.
According to last month’s initial estimate, GDP growth slowed to an annual pace of 1.8 percent in the January-to-March quarter from 3.1 percent in the fourth quarter of last year.
Friday brings data on consumer spending, personal incomes and pending home sales.
Experts said trading volumes could thin out ahead of a long holiday weekend. The markets will be closed on Monday next week to mark Memorial Day.