S&P 500 finishes with its weakest week since May

NEW YORK» U.S. stocks on Friday pulled further back from their records to cap the weakest week for the S&P 500 since May.

Indexes sloshed between small gains and losses for much of the day before turning lower in the afternoon after Iran said it seized a British oil tanker — the latest escalation of tension between Tehran and the West. Reined-in expectations for how deeply the Federal Reserve will cut interest rates at its next meeting also weighed on stocks.

The S&P 500 fell 18.50 points, or 0.6 percent, to 2,976.61. After setting its record high Monday, the index seesawed mostly lower and lost 1.2 percent for the week. It’s just the second down week for the index in the last seven. The Dow Jones industrial average fell 68.77 points, or 0.3 percent, to 27,154.20, and the Nasdaq composite lost 60.75 points, or 0.7 percent, to 8,146.49.

Momentum for stocks has slowed since early June, when they began soaring on expectations that the Federal Reserve will cut interest rates for the first time in a decade to ensure the U.S. economy doesn’t succumb to weaknesses abroad. The Fed’s next meeting is at the end of this month.

Late Thursday, Treasury yields sank after comments by Fed officials raised expectations that it may cut rates by half a percentage point, rather than the typical quarter point. But yields climbed Friday as the market grew more convinced that the Fed will cut just 0.25 of a percentage point on July 31.

The yield on the 10-year Treasury rose to 2.05 percent from 2.04 percent late Thursday. The two-year yield, which is more influenced by expectations of Fed moves on rates, climbed to 1.81 percent from 1.77 percent.

Until the Fed’s meeting, investors are focusing on whether companies can top the meager expectations Wall Street has for the profits they made during the spring.

Microsoft jumped in morning trading after reporting stronger earnings for April through June than analysts expected, though it faded as the afternoon progressed and ended with just a 0.1 percent gain.

Several banks climbed after reporting stronger-than-expected earnings, but financial stocks in the S&P 500 were down overall. That was partly because of a 2.8 percent drop for American Express, which reported stronger earnings for the latest quarter than analysts forecast but did not raise its forecast for full-year earnings.

Energy stocks had the biggest gains in the S&P 500 after the price of oil climbed on worries about possible supply disruptions.

Benchmark U.S. crude oil climbed 33 cents, or 0.6 percent, to settle at $55.63 per barrel after being down earlier in the day. Brent crude, the international standard, rose 54 cents, or 0.9 percent, to $62.47 per barrel.