U.S. stocks fell from near record levels, while Treasuries rose for the first time in three days as Greece and its creditors pushed debt negotiations into next week. The euro declined and the yen rallied.
The Standard & Poor’s 500 Index slipped 0.5 percent at 4 p.m. in New York. Selling accelerated in the final minutes of trading trading as some stock and index futures and options expired in a process known as quadruple witching. Yields on 10-year Treasury notes dropped seven basis points to 2.26 percent. The euro weakened 0.1 percent to $1.1344, while the yen rose 0.2 percent to 122.70 against the dollar.
The S&P 500 capped for its best weekly gain since April, advancing 0.8 percent as the Federal Reserve signaled that while interest rates will likely rise this year, increases would be gradual. Treasuries regained haven status with the yen, as the standoff over Greece’s debt continued. The country secured a few days of financial breathing space from the European Central Bank as leaders prepare to meet Monday.
“We had a rally in the aftermath of the Fed and I think markets are resting at the moment,” said Mark Luschini, chief investment strategist in Philadelphia at Janney Capital Management LLC, which oversees about $68 billion. “We’re not enthused enough about stocks to continue the rally in the absence of anything tangible to chew on or evidence the Greek saga is working toward a positive solution.”
Trading in U.S. shares was significantly higher than the 30-day average amid the quadruple witching. The S&P 500 rallied 1 percent yesterday to the highest since May 27. The slide Friday trimmed the biggest weekly advance since April 24. The Russell 2000 Index ended the week less than one point below an all-time high.
Federal Reserve policy makers this week signaled a pickup in the economy is keeping the central bank on track to raise rates this year, though subsequent increases are likely to be more gradual than anticipated earlier.
John Williams, president of the San Francisco Fed, said the central bank is likely to raise interest rates this year as the economy reaches full employment, though he’s troubled by low inflation.
“We’re flat and taking cues from Europe’s trading,” said Yousef Abbasi, the global market strategist at JonesTrading Institutional Services LLC in New York. “Right now, we’re just immune to Greece. Europe seems to think the Greece situation is under control and if something does happen, it won’t cause contagion.”
Greek stocks account for less than 0.1 percent of the Stoxx 600, while the country’s bond market has about 64 billion euros ($73 billion) in outstanding debt. Some 40 percent of that is owned by the ECB and euro-area central banks. In comparison, Germany’s market has 1.1 trillion euros outstanding.
European stocks gained on optimism a resolution to Greek talks is nearing, while advances in German bunds were matched by their Spanish and Italian counterparts as investors speculated any default wouldn’t trigger contagion.
The Stoxx 600 pared gains of as much as 1.2 percent as it capped a 1 percent weekly decline. Benchmark gauges in Portugal and the Netherlands led gains Friday, and Greece’s ASE Index added 0.6 percent.
The euro declined against most of its major peers, though it still rose against the dollar this week. The yen rallied along with Treasuries as investors sought the safest assets ahead of possible developments this weekend.
Italy’s 10-year bond yield fell two basis points to 2.28 percent. The rate on Spain’s similar-maturity bonds dropped one basis point to 2.27 percent, while Germany’s slipped five basis points to 0.75 percent.
Crude oil slipped 1.4 percent to $59.61 a barrel in New York and was little changed on the week as the strengthening dollar dimmed the commodity’s appeal to investors.