Fed raises rates, stocks hold up
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.