Fed raises rates, stocks hold up

The Washington Post Sunday - - MARKETS -

U.S. eq­ui­ties rose this week thanks largely to ad­vances in com­pa­nies with high div­i­dends that in­vestors turn to when bond yields fall.

The Stan­dard & Poor’s 500-stock in­dex added 0.2 per­cent to 2,378.25. The big­gest boost came Wed­nes­day af­ter the Fed­eral Re­serve raised the bench­mark lend­ing rate a quar­ter point and main­tained its pro­jec­tion for two more in­creases this year. The Dow Jones in­dus­trial av­er­age was lit­tle changed at 20,914.62.

“The Fed can lift rates and it is far from be­ing bad news for eq­ui­ties,” Tobias Levkovich, man­ag­ing direc­tor and head of U.S. eq­uity strat­egy at Cit­i­group Global Mar­kets, wrote in a note to clients Fri­day. “Yet, higher rates could be an is­sue for some eq­uity ar­eas, par­tic­u­larly growth stocks and small caps.”

Lower bond yields had a mixed ef­fect on the mar­ket: high-div­i­dend com­pa­nies tar­geted by in­vestors seek­ing fixed pay­ments ral­lied, while fi­nan­cial shares de­clined 0.9 per­cent for the sec­ond weekly loss. The yield on the 10-year Trea­sury fell 7.4 ba­sis points in the week.

The U.S. Trea­sury will sell $39 bil­lion of three-month and $33 bil­lion in six-month bills on Monday. They yielded 0.76 per­cent and 0.89 per­cent, re­spec­tively, in when-is­sued trad­ing.

The Trea­sury will also sell four-week bills Tues­day.

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