Stocks see third losing week in a row

Bond yields rising quickly as Fed hikes yet to cool economy

NEW YORK — Wall Street limped to the finish line of its third losing week in a row on Friday.

The S&P 500 barely budged as it ended the week with a loss of more than 2 percent, like other U.S. indexes. It edged down by 0.65, or less than 0.1 percent, to 4,369.71.

The Dow Jones Industrial Average added 25.83 points, or 0.1 percent, to 34,500.66, and the Nasdaq composite slipped 26.16, or 0.2 percent, to 13,290.78.

August has been rough for the stock market, which has given back more than a quarter of the S&P 500’s torrid gains for the year’s first seven months. That’s in part because a swift rise in yields has forced investors to reconsider whether stocks got too expensive, particularly after critics warned the market rose too far, too quickly.

Stocks held a bit steadier Friday after yields eased a bit. After topping 4.30 percent a day before and nearing its highest level since 2007, the 10-year Treasury yield fell back to 4.24 percent.

Higher yields mean bonds are paying out more in interest, but they also make investors less willing to pay high prices for stocks and other investments that are less stable than bonds.

The narrative in the stock market may be poised to flip from “buy the dip” during the first half of the year, when traders saw moments of weakness as opportunities to buy low, to “sell the rip” in the second half of the year, according to Bank of America investment strategist Michael Hartnett.

Yields are on the march because a string of data has shown the U.S. economy remains resilient. While that suggests the economy may avoid a predicted recession, it also raises expectations for the Federal Reserve to keep its main interest rate higher for longer.

The Fed last month hiked the overnight interest rate it controls to the highest level since 2002, as it tries to smother high inflation. High rates work by slowing the economy.

Traders had been hoping that the Fed was done hiking rates and would start cutting them next year. Inflation has come down considerably since its peak last summer.

But economists say the last bit to get inflation down to the Fed’s target may prove the most difficult.

And reports on the economy recently, including surprisingly strong sales at U.S. retailers, has suggested upward pressure still exists on inflation.