Rate cut expectations, Iran tensions drag on S&P 500

US stocks on Friday pulled further back from their records to cap the weakest week for the S&P 500 since May.

Indices sloshed between small gains and losses for much of the day before turning lower in the afternoon after Iran said that it had seized a British oil tanker, the latest escalation of tensions between Tehran and the West.

Reined-in expectations for how deeply the US Federal Reserve will cut interest rates at its next meeting also weighed on stocks.

The S&P 500 on Friday fell 18.50 points, or 0.6 percent, to 2,976.61. After setting its record high on Monday, the index see-sawed mostly lower and lost 1.2 percent from a close of 3,013.77 on July 12. It was just the second down week for the index in the past seven.

The Dow Jones Industrial Average on Friday fell 68.77, or 0.3 percent, to 27,154.20, falling 0.7 percent from 27,332.03 a week earlier.

The NASDAQ Composite on Friday lost 60.75, or 0.7 percent, to 8,146.49, dropping 1.2 percent from a close of 8,244.14 on July 12.

The Russell 2000 index of smaller stocks on Friday fell 7.73 points, or 0.5 percent, to 1,547.90, a decrease of 1.4 percent from 1,570.00 a week earlier.

Momentum for stocks has slowed since early last month, when they began soaring on expectations that the Federal Reserve would cut interest rates for the first time in a decade to ensure the US economy does not succumb to weaknesses abroad.

The Fed’s next meeting is scheduled for the end of this month.

Late on Thursday, US Treasury yields sank after comments by Fed officials raised expectations that it might cut rates by half a percentage point, rather than the typical quarter point.

However, yields climbed on Friday as the market grew more convinced that the

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