U.S. stocks little changed as calm descends after volatile week

NEW YORK – U.S. stocks ended little changed, with the Standard & Poor’s 500 Index on track for its worst month since May 2012, as equities found some respite from the wide swings prevalent earlier this week.

The S&P 500 rose 0.1 percent to 1,988.65 at 4 p.m. in New York, after earlier climbing as much as 0.3 percent. The gauge on Thursday posted its best back-to-back advance since March 2009.

“The market just may be tired,” said Cam Albright, head of investment strategy at Wilmington Trust in Baltimore. The firm oversees $76 billion. “Perhaps we’re due for a day less traumatic than what we’ve had. There has been a lot of price action in both directions, perhaps traders just made a chance to catch their breath.”

The S&P 500 traded Friday in the narrowest range in almost two weeks. The index’s 0.4 percent gain for the week masks a volatile period in which the benchmark plunged the most since 2011 to enter a correction, only to rally more than 6 percent over two days. The gauge is down 5.9 percent for the month, the most since October.

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The benchmark index yesterday capped its best two-day rally since the beginning of the bull market in 2009, helped by data showing stronger-than-expected U.S. economic growth. The Dow had its strongest back-to-back advance since December 2008. Global equities had lost as much as $8.4 trillion in value after China’s unexpected devaluation of the yuan earlier this month spurred concern the world’s second-biggest economy was on the brink of a deeper slowdown.

“We’re not done with all the volatility in equities,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “I think the worst is over, but are we out of the woods yet? No – we’re still going to have a lot of volatility.”

Data, Fed

U.S. data today showed consumer spending climbed in July as incomes grew, showing the biggest part of the U.S. economy was off to a good start to the quarter. Wages rose by the most this year, and the report showed inflation remained tame. A separate report showed consumer confidence declined in August to a three- month low as recent stock-market turbulence weighed on Americans’ outlook for the economy in the coming year.

Inflation is the theme at an annual symposium in Jackson Hole, Wyoming this week where Federal Reserve officials and economists have also been discussing market fallout from China’s slowdown that has cast doubt on whether the Fed will raise rates next month. Traders are now pricing in a 38 percent chance the central bank will act in September, up from a one-in-four chance two days ago.

St. Louis Fed Bank President James Bullard said in a Bloomberg Television interview Friday that while world financial markets are volatile, U.S. fundamentals are good and the interest rate-setting Federal Open Market Committee shouldn’t alter its forecast for the economy. Cleveland Fed President Loretta Mester also told Bloomberg TV she thinks the economy is strong enough to withstand higher interest rates.

Fed Vice Chairman Stanley Fischer, speaking on CNBC, said the central bank hadn’t decided on whether to raise its target at the next meeting.

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