"Given that inflation remains stubbornly high, then the Fed is going to be less accommodative going forward so we may end up a period of sluggish growth in stubbornly higher inflation," he said, referring to possible interest rate cuts from the Federal Reserve. Minutes released this week from the last meeting of the central bank's rate-setting arm doused some investors' hopes that policymakers will again cut rates to aid the economy when they meet at the end of June.
Orndorff predicts investors will need further evidence of how the economy is faring before they resume taking stocks back toward the highs seen last fall.
"I think the market for the most part is going to be in a somewhat narrow trading range until you get the earnings that come out in July. I think that's going to be an important quarter as people see how the effects of the global economy slowing are affecting the companies."
A Financial Times report that brewing company InBev is readying a $46 billion takeover bid for Budweiser maker Anheuser-Busch failed to shake Wall Street from its downcast mood. Often, buyout activity is fodder for a rally in stocks as it as seen as a bullish sign for the economy. But the buying appeared limited to the St. Louis brewer, whose shares hit an all-time high. Anheuser-Busch rose jumped $4.03, or 7.7%, to $56.61.
American Axle and Manufacturing Holdings fell 81 cents, or 4.2%, to $18.44 after the company said that workers approved a new contract including pay cuts and other concessions. The vote ends a strike that lasted nearly three months, hurting General Motors' production of large sport-utility vehicles and pickups. Although the contract's ratification will benefit GM, auto stocks have been under pressure this week because of soaring fuel prices. GM was the steepest decliner among the 30 stocks that comprise the Dow industrials, falling 83 cents, or 4.5%, to $17.60.
Declining issues outnumbered advancers by about 7 to 3 on the New York Stock Exchange, where volume came to 1.11 billion shares compared with 1.21 billion shares traded Thursday.
The Russell 2000 index of smaller companies fell 8.91, or 1.22%, to 724.10.
In overseas trade, Tokyo's Nikkei closed rose 0.24%. In Europe, London's FTSE ended down 1.53%, Frankfurt's DAX fell 1.79% and Paris' CAC 40 shed 1.89%.