Bond yields rose and stocks mostly bounced back from an early slide to finish with modest losses on Friday, a downbeat end on Wall Street to an otherwise milestone-setting week for the broader market.
The small decline snapped a six-day winning streak for the S&P 500, although the benchmark index still notched a weekly gain. The S&P 500 set three straight all-time highs earlier in the week, extending the market’s solid gains last month into this month. The S&P 500 is up 19.3 percent this year.
The major indices headed lower from the get-go on Friday, a tumble that briefly knocked 230 points off the Dow Jones Industrial Average.
Investors got rattled by government data showing an unexpected burst of hiring last month. That led traders to question whether the US Federal Reserve would decide to lower interest rates later this month.
The US Department of Labor said that US employers lost month added a robust 224,000 jobs.
The pickup in hiring could give the central bank pause later this month, when its policymakers are scheduled to meet and consider cutting the Fed’s benchmark interest rate.
Most investors have anticipated a Fed rate cut this month and perhaps one or two additional cuts later this year after the central bank last month signaled that it was prepared to lower interest rates to keep the US economy growing in the face of slowing global growth and the fallout from US trade conflicts.
“What the markets are really trying to figure out now, relative to the Fed, is on a stronger [jobs] report the question becomes, will they cut rates?” Wells Fargo Wealth and Investment Management chief investment officer Darrell Cronk said. “When you get this kind of holiday-shortened weeks and light trading volume, any kind of movement tends to be over accentuated.”
The S&P 500 on Friday fell 5.41 points, or 0.2 percent, to 2,990.41, but rose 1.7 percent from a close of 2,941.76 on June 28.
The Dow Jones Industrial Average on Friday dropped 43.88 points, or 0.2 percent, to 26,922.12, but also gained 1.2 percent from 26,599.96 a week earlier.
The NASDAQ Composite on Friday slid 8.44 points, or 0.1 percent, to 8,161.79, gaining 1.9 percent from a close of 8,006.24 on June 28.
The Russell 2000 index of smaller company stocks on Friday rose 3.50 points, or 0.2 percent, to 1,575.62, edging up 0.6 percent from 1,566.57 a week earlier.
Trading volume was light, as US markets reopened following the Independence Day holiday.
At the end of the month, the Fed is to hold its next meeting of policymakers, after which the panel would reveal whether it has decided to cut rates for the first time since the Great Recession in 2008 in the face of slowing economic momentum around the world.
Last year, Fed officials raised rates four times, in part to stave off the risk of high inflation and in part to try to ensure that they would have room to cut rates if the economy stumbled.
On Friday, the Fed emphasized that it would act as necessary to sustain the economic expansion, saying that most Fed officials have lowered their expectations for the course of rates.
The Fed’s statement came in its semiannual report on monetary policy.
The Fed Funds futures, a barometer of whether investors are expecting the Fed to cut rates or not, has been showing a strong chance of a rate cut this month and another later this year, with an outside chance of a third.
Traders were on Friday betting that a rate cut late this month might be less likely now.
Investors sold bonds, sending the yield in the 10-year US Treasury note up to 2.04 percent, from 1.95 percent late on Wednesday, a big move. Bond yields fell through much of last month as investors’ expectations of a Fed rate cut increased.
A slight easing of trade tensions between the US and China helped spur the market’s gains earlier this week.
Both nations have agreed to refrain from new tariffs while they open a new round of negotiations. The development relieved some pressure on the market, although the trade war still looms over global economic growth.
US National Economic Council Director Larry Kudlow on Thursday told reporters that he expected to announce new negotiations soon.
Still, forecasters warned that the truce is fragile, because the two sides still face the disputes that caused talks to break down in May.
Besides any developments on trade, the next major catalyst for the market would likely be the flood of earnings reports that companies are set to release in coming weeks as the second quarter reporting season begins.
Expectations are generally low and this could be the first time in three years that S&P 500 companies report a back-to-back decline in overall earnings, FactSet Research Systems Inc said.
Additional reporting by staff writer
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