US stocks end week lower as market eyes earning

NEW YORK: US stocks retreated this week following a light calendar of economic news punctuated by a brief mid-week swoon over troubles at a leading Portuguese bank.

Equities scored modest gains Friday, partially offsetting the losses from the prior day when worries about Portugal’s banking system rocked the market.

But Friday’s increases were not enough to offset earlier losses.

The Dow Jones Industrial Average fell 124.45 points (0.73 percent) to 16,943.81.

The broad-based S&P 500 dropped 17.87 (0.90 percent) to 1,967.57, while the tech-rich Nasdaq Composite Index gave up 70.44 (1.57 percent) at 4,415.49.

Investors pored over minutes from the US Federal Reserve’s June policy meeting released Wednesday that disclosed the central bank plans to end its bond-buying stimulus program in October.

The Fed also confirmed that it will keep near-zero benchmark interest rate for “a considerable time” after the asset-purchase program ends, leaving in place the Fed’s mid-2015 time frame for raising rates.

The minutes helped push stocks higher Wednesday.

But US stocks nosedived the next morning, following European markets sharply lower as investors recoiled at news Portugal’s market regulator halted trading in Banco Espirito Santo (BES) amid allegations the bank’s parent company covered up a 1.3 billion euro ($1.8 billion) hole in its accounts.

The news renewed concern that Portugal’s banks remain vulnerable after the country emerged from a three-year international bailout in May.

Both US and European markets rose Friday following reassurances from top Portuguese officials that BES was in solid shape.

But the episode showed the brittleness of investor sentiment after a buoyant second quarter that lifted the S&P 500 4.7 percent and set several new records.

Some market commentators predict a 10-12 percent correction in the weeks ahead.

“Portugal was certainly an issue,” said Alan Skrainka of Cornerstone Wealth Management.

“It shows there is a lot of nervousness,” after US markets hit record highs last week, he said, calling the BES news “an excuse for the stock market to sell off.”

Despite a run of strong monthly Labor Department jobs reports and some other encouraging data, analysts still see signs of economic weakness.

Top of the list has been disappointing news from retailers.

The Container Store pointed to a “funk” within the industry as it reported a loss in its fiscal first quarter.

Gap reported that June comparable-store sales fell two percent.

Source: AFP