U.S. stocks closed sharply lower on Friday, following negative news that sent overseas stocks lower, as investors looked ahead to a heavy week of earnings.
The major indices had their worst week since the one ended March 27, closing down about one percent for the week. The Dow Jones industrial average fell 357 points and dipped into the red for the year before coming off lows in the close to eke out a gain for 2015, with American Express and 3M among the greatest decliners. (Tweet This)
Despite the major decline, analysts noted that the indices were still within a range near all-time highs.
"I don't think it's a data panic. The volume is good but not what it would be" if it was about data, said JJ Kinahan, chief strategist at TD Ameritrade. "It looks like profit-taking." He also noted options expirations on Friday.
"I think what's more market moving (than domestic data) is Europe and concerns about Greece, and the put trading rules (in) China," Jim Meyer, chief investment officer at Tower Bridge Advisors.
Meyer said the negative reaction in equities and futures was more of an "aftershock." "It should really not affect us at all. The Chinese market has been an unusual source of strength," he said. "In a very quiet market on a Friday it doesn't take much to move the market."
European stock indices ended sharply lower on Friday, following a selloff in Chinese futures over news of coming government regulation to expand short-selling and limit over-the-counter margin trading.
"We know on Monday China has potential being down a lot," said Peter Boockvar, chief market analyst at The Lindsey Group. "Greece is an issue again."
Greek Finance Minister Yanis Varoufakis met with IMF officials on Friday, as investors became increasingly nervous about the funding crisis in Greece.
"I think that combination of a stronger euro and Greek chatter has profit-taking in the euro zone," said Art Hogan, chief market strategist at Wunderlich Securities.
The U.S. dollar held steady, with the euro near $1.08, its high for the week.
German bund yields dipped below 0.05 percent, Reuters said. Italian, Spanish and Portuguese 10-year bond yields jumped more than 5 percent.
Boockvar noted that the selloff in U.S. index futures and European equities came within an hour after Chinese stock futures fell around 5 a.m. ET. U.S. stocks are also near levels of resistance at the high end of the recent trading range of 2,040 and 2,120 on the S&P 500, he said.
"The S&P futures are lower this morning on the back of weakness overseas," BTIG's Chief Technical Strategist Katie Stockton said in a note. "The pullback follows new all-time highs in small- and mid-cap indices, although the SPX has yet to follow suit. We think a brief pause will allow for a breakout, noting the DeMark indicators support about four days of consolidation. We think a bullish bias is appropriate with breakouts far outnumbering breakdowns among individual stocks."
The S&P 500 fell below its 50-day moving average of 2,085.02. The Dow dipped below its 50-day moving average.
"If the market closes down today, the market will have failed to break out of its current consolidation range," Lance Roberts, general partner at STA Wealth Management, said in a note. "This suggests more sloppiness going into next week."