Greece Worries End U.S. Stocks Streak
A five-week streak of gains on U.S. markets ended Friday after revived worries that Greece will default on its huge mountain of debt sent stocks falling.
Clear signs that Athens was close to a political deal that would enable a huge debt restructuring and new European Union bailout boosted stocks over the first four days of the week.
But the gains were wiped out Friday as cracks in the deal appeared, both from the Greek side and EU side, leaving the Dow Jones Industrial Index to close at a 0.69 percent loss for the week, at 12,801.23.
The broad-based S&P 500 gave up the same amount for the five days to end at 1,342.64, while the tech-heavy Nasdaq Composite lost 0.80 percent to 2,903.88.
A mixed but mostly unimpressive bunch of company results, closing out the middling fourth quarter reporting season, failed to give investors cause to ignore the turbulence in the eurozone.
"It was a European week," said Evariste Lefeuvre of Natixis. "What took place in Greece was very important because there were not a lot of significant statistics or company results."
"The mood is a little somber on Wall Street," said Frederic Dickson of D.A. Davidson & Co.
"Wall Street is still looking for some direction and there is some uncertainty."
Friday's downturn also was a response to trade data in China that underscored that economy's slowdown, which hit resource-tied stocks like Alcoa that depend on Chinese industrial demand for growth.
But the indices were still solidly up for the year-to-date, the Dow 4.8 percent higher, the S&P 6.8 percent, and the Nasdaq 11.5 percent.
Most analysts saw more of the same for next week, as the Greek bailout remained in the balance late Friday and time was running out for the country to beat a crucial debt payment dat.
"External events continue to be major sources of risk to our base forecast for a gradual but continuous recovery," said Macroeconomic Advisors.
"Should agreements for a Greek bailout and restructuring of its debt not be reached, it could disrupt financial markets with potentially significant spillovers into the U.S."
Another expected down-the-wire political battle on extending U.S. payroll taxes before the end of February will also keep markets on edge, with both Republicans and Democrats looking to score political points as the presidential election campaign heats up.
Key data releases coming up next week include retail sales and business inventories in January on Tuesday, industrial production on Wednesday, producer prices on Thursday and consumer prices on Friday.
Expectations are for a slight pickup in prices, but nothing that would move the Federal Reserve to reconsider its ultra-low interest rate policy.