Stocks ended the week on a sour note on Friday after the previous day’s rally had given hope to investors heading in to the weekend.
Indices rallied around a percent and a half each on Thursday after better-than-expected economic reports combined with renewed hopes that the Federal Reserve would keep interest rates at their current record lows.
On Friday, however, the international monetary fund cut its forecast for U.S. growth in 2014 down from 3 percent to 2.7 percent, while leaving the 1.9 percent growth forecast for the current year in place. Though the IMF confirmed that the U.S. economy was resting on strengthening fundamentals, the organization also criticized spending cuts and tax increases that have kicked in 2013. Furthermore, it advised the Federal Reserve to be extremely cautious as it begins to draw back its massive stimulus program.
Meanwhile, the preliminary Thomson Reuters/University of Michigan index of consumer sentiment for the month of June came in below the forecasted 84.5 at 82.7, after hitting a six-year high in May.
The S&P 500 closed at 1,626.73 points on a loss of 0.59 percent, while the Dow was down 0.7 percent to 15,070.18. The Nasdaq dropped 0.63 percent to close at 3,423.56 points.
Only five of the Dow’s components ended the day in the positive, with American Express (AXP) and E.I. du Pont de Nemours (DD) leading the way down with losses of over two percent.
On the S&P 500, newspaper publisher Gannett Co. dropped over 6 percent to $25 a day after shares had spiked on the announcement that the industry’s largest conglomerate was purchasing the TV station Belo Corp. (BLC). Otherwise, financial stocks were the highest-volume drag on the index, with Microsoft (MSFT), Micron Technology (MU) and Cisco Systems (CSCO) each dropping around 1 percent.