Stocks ended a choppy week of trading with modest losses Friday as investors look forward to getting more clues about the direction of interest rates.
Technology shares drove the declines, and energy stocks also fell a day after leading the market. Some late-day gains in banks and insurers helped temper the market's losses.
Investors dealt with fresh concerns about the impact on businesses of the U.S. trade dispute with China. The chipmaker Broadcom warned that demand for chips has slowed because of U.S. restrictions on sales to Chinese technology firms and hesitation among customers to place new orders. It shaved $2 billion from its annual revenue forecast.
Trading this week was uneven as investors swung between safe-play holdings and riskier bets. Stocks rose Monday but then seesawed as investors saw signs that the U.S. and China won't settle their differences on trade anytime soon. There is concern that a protracted dispute could further hurt global economic growth and corporate profits. A suspected attack on two oil tankers in the Strait of Hormuz added more uncertainty.
The S&P 500 index fell 4.66 points, or 0.2%, to 2,886.98 Friday and ended the week with a slim gain of 0.5%. The Dow Jones Industrial Average dropped 17.16 points, or 0.1%, to 26,089.61. The Nasdaq composite slid 40.47 points, or 0.5%, to 7,796.66. The Russell 2000 index of small company stocks dropped 13.30 points, or 0.9%, to 1,522.50.
The major indexes are still showing strong gains for June — the Dow is up 5.1% and the S&P 500 is up 4.9%. Last week, Federal Reserve Chair Jerome Powell set off a market rally after he signaled that the central bank is willing to cut interest rates to help stabilize the economy if the trade war between Washington and Beijing starts to slow economic growth.
The Fed holds its next meeting of policyholders next week. No action on rates is expected, but the futures market indicates that investors are almost certain the Fed will cut rates at its July meeting, so they'll carefully parse a statement from the central bank and comments from Powell on Wednesday.
Economists Ethan Harris and Aditya Bhave of Bank of America Merrill Lynch wrote in a note to clients that Fed officials probably haven't decided yet whether to cut rates in July and won't try to sway investors one way or another at next week's meeting. They say that Powell will have to "tap dance" during his press conference and expect him to "keep options open with the possibility of a cut in July but not a pre-commitment."
The economists expect Fed officials to wait until the second week of July to indicate whether they intend to cut rates, after seeing the next government report on the jobs market and other economic data. They'll also know the results of an important meeting of the G-20 in late June, where President Donald Trump and Chinese President Xi Jinping could meet and try to negotiate a deal on trade.
Harris and Bhave say the Fed is likely to cut rates in September.
Chipmakers were the big decliners on Friday. Broadcom, which gets about half its revenue from China, fell 5.6%. Texas Instruments also gets nearly half its revenue from China, according to markets research company FactSet, and it shed 3.5%.
Energy stocks fell, giving back some of the strong gains from Thursday. Oil rig operator Noble Energy dropped 5%.
Banks and insurers posted gains late in the day to boost the financial sector. Regional bank PNC rose 1.1% and Allstate gained 1%.
Facebook rose 2.2%. The social media company has reportedly enlisted some key backers for its upcoming cryptocurrency.
Utility stocks were among the biggest gainers. That's typically a sign that investors are worried about economic growth and shifting money into safer holdings. Consumer staples, also considered less risky, swayed between small gains and losses.
Friday closed out another good week for initial public offerings.
PetSmart removed the leash from its online pet products company Chewy, which surged 59% in its debut. The 8-year-old company garnered high demand. It priced at $22 per share and is now valued at $8 billion.
Other recent strong IPOs include cloud-computing security company CrowdStrike, which jumped about 70% on its first day of trading Wednesday. Plant-based meat alternative company Beyond Meat nearly tripled in value on its first day of trading in May and at Friday's close of $150.13 is six times higher than its initial offering price
Renaissance Capital, a provider of institutional research and IPO ETFs, has seen a 34% gain in its IPO ETF so far this year. That's outpacing the 15% gain in the broader S&P 500.
"That's an indicator that investors in these new companies are making money and are more inclined to go into new ones," said Kathleen Smith, principal at Renaissance Capital.
In other trading, benchmark crude oil rose 0.4% to settle at $52.51 a barrel. Brent crude oil, the international standard, added 1.1% to close at $62.01 a barrel. Wholesale gasoline rose 0.7% to $1.733 per gallon. Heating oil added 1.3% to $1.83 per gallon. Natural gas rose 2.7% to $2.387 per 1,000 cubic feet.
Gold edged up 0.1% to $1,344.50 per ounce, silver lost 0.6% to $14.80 per ounce and copper fell 1% to $2.63 per pound.
The dollar rose to 108.55 Japanese yen from 108.34 yen on Thursday. The euro weakened to $1.1207 from $1.1279.