Dow sees worst week of year
NEW YORK — U.S. stocks declined Friday, handing the Dow Jones Industrial Average its worst week this year, with investors on uncertain footing as longer-term Treasury yields rose to two-year highs.
The Dow slid 30.72 points, or 0.2 percent, to finish at 15,081.47, while the S&P 500 index fell 5.49 points, or 0.3 percent, to close at 1,655.83.
The Nasdaq Composite shed 3.34 points, or 0.1 percent, to end at 3,602.78.
For the week, the Dow lost 344 points, or 2.2 percent, suffering its biggest weekly percentage drop and point loss of 2013. It was the blue-chip index’s worst weekly percentage slide since May 2012, and its largest point decline since June 2012.
The S&P 500 slumped nearly 36 points, or 2.10 percent, for the week, suffering its biggest weekly point drop of the year, but not its biggest percentage decline. The tech-heavy Nasdaq was down just 1.6 percent for the week, as Apple’s 10.5 percent weekly gain provided a boost.
All three main stock indexes lost ground for the second week in a row.
“Stocks are taking their lead from the bond market. Higher yields are not good news for stocks, but if higher yields come because the economy is getting stronger,” the latter would be positive for equities, said Kate Warne, investment strategist at Edward Jones.
While stock indexes traded in a limited range on Friday, longer-term Treasury yields resumed their rapid climb, with the 10-year rising 5 basis points to 2.83 percent.
“Around lunchtime, the 10-year note got hit and the yield moved above yesterday’s high. If the yield would back off below 2.8 percent, stock buyers would be a bit encouraged,” Elliot Spar, market strategist at Stifel Nicolaus & Co., emailed in afternoon commentary.
Jerry Villella, a J.P. Morgan Private Bank investment specialist based in Dallas, said that “real yields are moving up, and that’s a reflection of a healing economy. Steep yield curves do not precede recessions.”
He believes the recent and violent move in yields will moderate, with the 10-year yield moving between 2.5 percent and 3 percent through the end of the year. Villella also noted that stocks still are showing sizable gains for 2013 to date.
“Even after a pullback from the last couple of days, we’re still up year to date, and just like 2012, it coincides with a weakly growing economy. Two percent economic growth gave us 16 percent equity appreciation last year,” said Villella. The S&P 500 has gained 16 percent so far this year.
“Earnings-per-share growth is what counts,” said Villella, adding that 3 percent of that growth is coming from top-line, or sales growth, none stems from margin expansion and 1 percent comes from a shrinkage in shares outstanding due to corporate share repurchases.
Gold prices rose $10.10, or 0.7 percent, to $1,371 an ounce, extending a two-day rally in which it gained $40.40, or 3.1 percent. Up for six of its past five sessions, the metal is up 4.5 percent for the week, 4.1 percent for the month and down 19 percent for the year.
Oil prices rose slightly, finishing 1.4 percent higher for the week, and the dollar edged higher against the currencies of major U.S. trading partners.
Economic reports on Friday drew little reaction for Wall Street.
The Commerce Department reported housing starts climbed at an annual rate of 896,000, less than the 915,000 estimated.
“They were a bit weaker than expected, but I still think it’s overall good news, as they approached 900,000. I was disappointed about single-family starts, which actually declined, and it is a bit surprising. Based on recent permit data, I was hoping to see more of an uptick on the single-family side,” said Elizabeth Ptacek, a senior credit real-estate analyst at KeyBank.
But Ptacek believes that difficulty in getting financing is more of an issue for housing than higher interest rates: “Credit remains very tight. It’s easing, but not quickly enough for first-time home buyers.”
The Labor Department reported productivity rose at a slightly better-than-estimated 0.9 percent annual rate in the second quarter. The initial read of the University of Michigan/Thomson Reuters consumer sentiment fell to 80.0 this month, down from 85.1 in July, according to published reports.
Nordstrom Inc. (JWN) shares fell 4.9 percent a day after the high-end retailer reported lower-than-expected sales and cut its full-year forecast.
Aspen Technology Inc. shares jumped 7.9 percent after the maker of software for process manufacturing posted higher-than-expected sales and earnings for the fiscal fourth quarter.
Dell Inc. posted adjusted earnings of 25 cents per share _ a penny higher than analysts had predicted. Shares of the personal-computer maker gained 0.8 percent.
Upbeat jobless-claims data on Thursday helped cement the view that tapering of the Federal Reserve’s bond-buying program will happen in September. U.S. stocks sank for a second day, driven by tapering fears, downbeat corporate news and a spike in Treasury yields to 2011 highs.