The S&P 500 managed a minute weekly gain on Friday after two straight weeks lower, but headwinds for blue chips left the Dow lower for the period, extending its losses for a third week.
Company and sector reports were increasingly shaping the direction of stocks, with a number of retailers, especially popular fashion chains, showing vulnerability.
However, the theme of the week overall remained rising US Treasury yields that were attracting money out of foreign emerging markets — sending emerging market funds and exchange-traded funds plunging — and the guessing game on whether the US Federal Reserve would begin to pull in its stimulus program next month.
The Fed’s policy-setting Federal Open Market Committee (FOMC) has signaled since May that it would begin to taper its US$85 billion a month bond-buying program late this year, as long as economic growth remained on track.
However, data continued to present a mixed picture, with the minutes to the FOMC’s meeting late last month showing the policymakers themselves uncertain about the overall trajectory.
The broad-based S&P 500 added 0.5 percent for the week, finishing at 1,663.50. The Dow Jones Industrial Average lost 0.5 percent to 15,010.51. The NASDAQ Composite added 1.53 percent to 3,657.79, as the market itself shrugged off a three-hour shutdown on Thursday due to technical problems.
The Dow was pulled lower by poor performances in stocks tied to consumer spending such as Coke and Walmart and in big banks. However, Hewlett-Packard stood out as a loser, plunging 15.2 percent on another poor quarter as PC sales continued to sink.
Microsoft acted as a bit of a counterbalance, gaining 9.3 percent, most of that from a 7.3 percent leap on Friday in reaction to the announcement that chief executive Steve Ballmer would retire within the next 12 months. No replacement was named.
The week ended on a soft note, data wise, that for many analysts and traders pointed to the continuation of Fed bond-buying for the next few months at least.
The US Department of Commerce reported an unexpected downturn in new home sales in June and last month, likely the result of higher mortgage interest rates.
Paul Edelstein of IHS Global Insight said that was enough to keep the Fed from taking any tapering action yet.
“The labor market was too uncertain for the Fed to taper in late-July and developments since then haven’t settled the matter,” he said.
“The July employment report ... showed a decline in the unemployment rate, but slower payroll growth and downward revisions to May and June,” he said. “So, we don’t expect tapering at the September meeting.”
However, others believe the Fed will make the move, after flagging it for months.
“We still think that the most likely outcome is that the FOMC will take the first step to reduce the pace of asset purchases in September, but it is not yet a done deal,” Nomura economists said in their weekly review.
Trade is still likely to be under the drag of summer holidays in the coming week, with guideposts set by reports on last month’s durable goods orders tomorrow, home prices and consumer confidence on Tuesday, a fresh update of the estimate for second quarter GDP growth on Thursday and personal incomes on Friday.