U.S. stocks traded in their tightest weekly range in 21 years as investors sorted through data that kept them guessing about the economy’s resiliency.
Equities slipped in the five days after zigzagging between gains and losses, with the Standard & Poor’s 500 Index ending the period lower by 0.7 percent. That’s the sixth straight week with a move of less than 1 percent, the longest stretch of calm since May 1994.
Friday’s action was a microcosm of the week, as the index swung from green to red more than a dozen times. Jobs data that showed the strongest hiring in five months and the biggest wage gains in two years bolstered optimism in the economy and fueled bets the Federal Reserve will raise interest rates this year. Equities investors, already skittish amid a selloff in global bonds and signs Greece’s debt standoff could end in default, are weighing whether higher borrowing costs will snuff out a recovery struggling to gain traction.
“Economic strength is the long-term driver,” Kate Warne, an investment strategist at Edward Jones & Co. in St. Louis, said by phone. “The trend overall is modestly positive, but we’re likely to see this choppiness along the way. There’s a worry every day and there’s also a resolution for one of those worries every day, so we have this up and down pattern. There is still uncertainty about various issues.”
The S&P 500 finished the week 1.8 percent below its May 21 record. The gauge has not moved more than 1 percent in either direction in 14 of the past 15 sessions, and the spread between the highest and lowest close this year has been only 6.9 percent, the narrowest since 2006.
Investors digested a mixed batch of economic data, with growth in manufacturing offsetting reports that showed consumer spending stalled and factory orders slipped. Friday’s jobs data tipped the scales in favor of a rebound, as the 280,000 increase in non-farm payrolls in May further dispelled fears that a first-quarter slowdown would persist.
The hiring report sent 10-year Treasury yields surging to the highest level this year and pushed the dollar to a 13-year high versus the yen as investors speculated the Fed will boost rates in September. Traders of money-market derivatives lifted the chance of the Fed raising rates then to over 50 percent, according to CME Group data.
“The market was a little bit unsettled,” Greg Woodard, senior analyst and strategist at Fairport, New York-based Manning & Napier Inc., which oversees about $46 billion. “With some of the uncertainties out there and couple that with valuations that are as not attractive as they were a couple years ago, you’re seeing a little bit sideways trading in the market. People are certainly keeping an eye on Greece.”
Among the week’s worries were downgrades to economic forecasts. The Organization for Economic Cooperation and Development cut its global-growth prediction and the International Monetary Fund lowered its U.S. outlook. The IMF also urged the Fed to postpone a rate increase until 2016.
Fed Bank of New York President William C. Dudley said the central bank is still likely to start raising borrowing costs this year if the labor market improves further.
Investors are also seeking progress in Greek negotiations after the country deferred a loan payment. Greece said it will bundle a payment due Friday along with three others it owes the IMF by the end of the month. The country rejected demands for more austerity to receive bailout funds.
The Stoxx Europe 600 Index slipped 2.7 percent for the five-day period, extending its two-week decline to 4.6 percent. German 10-year bunds had their worst week since 1998, with yields surging 36 basis points.
Volatility in equities rose for a second straight week as the Chicago Board Options Exchange Volatility Index climbed 2.7 percent. The gauge known as the VIX fell to its lowest level this year on May 21.
Seven of the S&P 500’s main groups decreased for the week, led by losses of at least 2.5 percent for consumer-staple and utility stocks.
The group of power companies in the benchmark gauge fell as the yield on 10-year Treasuries rose 29 basis points, the biggest five-day gain since the first week of February.
The stronger dollar weighed on consumer-staples producers as Philip Morris International Inc. and General Mills Inc. slipped more than 3 percent.
The S&P 500 energy index lost 1 percent amid a 1.9 percent decline in crude oil prices, the resource’s first weekly drop since the five days ended March 13. Valero Energy Corp. and Marathon Petroleum Corp. fell more than 2.4 percent.