The Norman Transcript

Nation/World

August 17, 2013

Dow hits worst week of 2013

NEW YORK — Stocks fell Friday, closing out what was the worst week of the year for the Dow Jones industrial average.

The market was dragged lower by a weak performance from retailers and companies sensitive to higher interest rates. Homebuilders and banking stocks were among the best performers.

Stocks had a decent start to the week, but investors were hit hard the last three days. The Dow retreated 2.2 percent for the week, its worst in 2013. The broader Standard & Poor’s 500 index lost 2.1 percent for the week, its second-worst performance of the year.

The possibility of a cutback in the Federal Reserve’s massive bond-buying program in September has roiled the bond market, which has spilled over into stocks. The yield on the benchmark U.S. 10-year Treasury note rose to 2.83 percent, its highest level since July 2011. A week ago, the yield was 2.58 percent.

“When yields are going up like this, that’s scary for most equity investors,” said Brian Reynolds, chief market strategist at Rosenblatt Securities.

Rising bond yields have a direct impact on the cost of borrowing for everyone — from home owners trying to refinance their mortgages to companies trying to sell debt - making them a potential long-term drag on the economy. The Federal Reserve bond-buying programs were designed to keep the cost of borrowing as low as possible.

On Friday, the S&P 500 lost 5.49 points, or 0.33 percent, to 1,655.83. The Dow fell 30.72 points, or 0.2 percent, to 15,081.47 and the Nasdaq composite lost 3.34 points, or 0.1 percent, to 3,602.78.

Shares of utilities and telecommunications companies, which typically perform poorly in a higher interest-rate environment, closed broadly lower. New York-based utility Consolidated Edison Inc. fell 75 cents, or 1.3 percent, to $56.64 while California’s PG&E was down 71 cents, or 1.6 percent, to $42.64. Verizon Communications Inc. and AT&T Inc. fell 1.7 percent and 0.5 percent, respectively.

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