US stocks on Friday inched lower as bond yields jumped, a shift that helped banks, but hurt companies that pay big dividends.
The US dollar fell after US President Donald Trump said China is manipulating its currency.
Companies including Microsoft Corp and Honeywell International Inc rose as investors were pleased with their quarterly reports, but General Electric Co stumbled.
Stocks wobbled all week as investors reacted to solid company results, as well as heightened trade tensions.
Over the prior two days, Trump criticized the US Federal Reserve for raising interest rates and China, saying that he was willing to put tariffs on all US imports from China and that China, the EU and others are harming the US by weakening their currencies and reducing interest rates.
Stocks were not affected, but the dollar declined and short-term bond yields slipped, suggesting investors wondered if the Fed might raise interest rates more slowly.
“If there’s a toss-up between raising and not raising [rates], you wonder what role these types of comments might possibly play,” Wells Fargo Investment Institute strategist Sameer Samana said.
Samana said he does not think that the Fed will make big changes to its policies based on Trump’s comments, even if the president starts advocating more forcefully for lower rates, but it is something investors will have to think about.
“We think the Fed has independence and they’ll continue to do the right thing,” Samana said. “This is one more item that just creates noise in markets.”
Investors have worried that the trade war and other disputes involving the US could slow down the global economy.
The S&P 500 on Friday dipped 2.66 points, or 0.1 percent, to 2,801.83, essentially flat from a close of 2,801.31 on July 13.
The Dow Jones Industrial Average on Friday lost 6.38 points to 25,058.12, rising 0.2 percent from 25,019.41 a week earlier..
The NASDAQ Composite on Friday gave up 5.10 points, or 0.1 percent, to close at 7,820.20, shedding 0.1 percent from a close of 7,825.98 on July 13.
The Russell 2000 index of smaller-company stocks on Friday fell 4.50 points, or 0.3 percent, to 1,696.81, rising 0.6 percent from 1,687.08 a week earlier.
Short-term bond yields inched higher. The yield on the two-year US Treasury note rose from 2.59 percent to 2.60 percent.
Long-term bond prices dropped. The yield on the 10-year Treasury note rose from 2.85 percent to 2.90 percent. That helped banks, because bond yields are used to set interest rates on many kinds of loans, including mortgages.
JPMorgan Chase & Co gained 1.3 percent to US$111.28 and Bank of America Corp picked up 1.6 percent to US$30.13.
Microsoft continued to set records after its fiscal fourth-quarter results topped Wall Street forecasts and its cloud-computing division continued to grow.
The company said it has been helped by its rivalry with Amazon.com Inc, because some retailers are reluctant to team up with Amazon on cloud-computing services while they compete with Amazon in sales.
Microsoft stock climbed 1.8 percent to US$106.27.
General Electric lost 4.4 percent to US$13.12 after it said its power business continued to struggle as revenue and orders decreased.
The firm, which has been selling and splitting off businesses, also cut its forecast for how much cash its businesses would generate.
Additional reporting by staff writer
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