Wall Street’s bears remained in control as the Dow and S&P 500 headed lower for the third week in a row, the S&P 500 posting its worst weekly performance since November. Investors worried about Greece leaving the euro zone. The country’s politicians couldn’t form a coalition government, so a fresh vote needs to be taken. Over here, the continuing saga of JP Morgan’s big trading loss kept investors on edge, along with a big drop in the Philly Fed index that showed a manufacturing slowdown in that region.
Continuing the disappointments, April Retail Sales were up only half what was forecast and the Leading Economic Indicators (LEI) index surprised with a drop. But on the positive side, the CPI inflation reading came in without any shocks. Also, Industrial Production surged a better than expected 1.1% in April and the Empire State Manufacturing Index handily beat expectations for May, which dispelled factory sector concerns. Friday saw the frenzy around the IPO of social website Facebook, whose shares closed up a mere 0.6%.
For the week, the Dow ended down 3.5%, at 12369; the S&P 500 closed down 4.3%, to 1295; and the Nasdaq sank 5.3%, to 2779.
As investors worried about Greece and swallowed hard on some disappointing economic data, they flocked to the safe haven of bonds. Mortgage-backed securities did well, with the FNMA 3.5% bond we watch finishing the week UP .15, to $104.16. Rising bond prices drove national average mortgage rates down deeper into record territory in Freddie Mac’s weekly survey, although purchase loan demand dipped