NEW YORK (AP) — The stock market moved lower Friday, heading for its first weekly loss since the start of August.
Treasurys fell after news that retail sales in August rose faster than economists had forecast. That reinforced expectations that the Federal Reserve may start hiking interest rates sooner than expected.
Declines in stocks were led by utility companies as investors dumped dividend-rich stocks, following a rise in Treasury yields.
KEEPING SCORE: The Standard & Poor’s 500 index dropped eight points, or 0.4 percent, to 1,989 as of 12:19 p.m. Eastern time. The Dow Jones industrial average fell 46 points, or 0.3 percent, to 17,001. The Nasdaq composite dropped 16 points, or 0.4 percent, to 4,575.
SUBDUED MOOD: Stocks have had a lackluster week as investors struggle to find reasons to buy shares. Investors are wondering whether the Fed is closer to raising interest rates. Policy makers are scheduled to meet next week. The S&P 500 index is down 0.8 percent for the week. The last time it ended a week lower was Aug. 1.
RETAIL SALES: Car buying drove U.S. retail sales higher in August, a possible sign that job growth in recent months has sped up consumer spending. The Commerce Department said Friday that seasonally adjusted retail sales rose 0.6 percent compared with the prior month. Economists had expected a gain of 0.5 percent. July sales were also revised upward to a 0.3 percent increase from flat.
THE QUOTE: Investors shouldn’t be worried by higher interest rates right now, said Karyn Cavanaugh, a senior market strategist at Voya Investment Management, because they are a signal that the economy is getting better.
Higher interest rates “are a testament to the economy being able to function on its own,” said Cavanaugh. “It’s a good thing.”
BONDS AND CURRENCIES: Bond prices fell. The yield on the 10-year Treasury note, which rises when prices fall, climbed to 2.59 percent from 2.55 percent late Thursday. The yield on the note has climbed from 2.34 percent at the start of the month.
The dollar remains firm ahead of a Fed meeting next week. A number of traders think the Fed may hint that interest rates could start rising sooner than expected. The euro was 0.1 percent higher at $1.2937 while the dollar rose 0.1 percent to 107.30 yen.
HIGH-YIELD SELL: As Treasury yields rose, dividend-rich utilities and telecoms stocks sold off. Real estate investment trusts also slumped. Utility stocks fell 1.2 percent, the biggest drop of the 10 sectors that make up the S&P 500.
Investors have been flocking to buy the stocks of companies that pay big dividends, after a rally in bonds pushed yields lower in that market. Now that bond yields are rising, the dividend yield offered by those stocks look less alluring in comparison.
DONE DEAL: Conversant, a provider of online advertising services, climbed $8.28, or 31 percent, to $34.99. The rise came after Alliance Data said late Thursday it was buying Conversant for about $2.3 billion.
SICKLY SLUMP: Health Care REIT, an investment trust that invests in senior housing and health care real estate, was the biggest decliner in the S&P 500. The company said it was selling an additional $1.1 billion of stock to repay debt and fund investments. Its stock dropped $2.39, or 3.6 percent, to $64.10.
EUROPEAN STOCKS: France’s CAC 40 was unchanged at 4,441.70 and Germany’s DAX lost 0.4 percent to 9,651. Britain’s FTSE 100 edged up 0.1 percent to 6,806.96.
OIL: Crude rose 30 cents to $93.13 a barrel in New York.
AP Business Writer Kelvin Chan contributed from Hong Kong.
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