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U.S. Stocks, Bonds Notch Weekly Gains -- WSJ

18 Mar 2017 6:32 am

Utilities, real-estate shares lift S&P 500; energy sector recoups some week-ago losses
By Corrie Driebusch and Aaron Kuriloff 

Investors poured money into government bonds and dividend-paying stocks Friday, pushing major indexes to weekly gains.

The Dow Jones Industrial Average slipped 19.93 points, or 0.1%, to 20914.62 on Friday, while the S&P 500 fell 3.13 points, or 0.1%, to 2378.25, and the Nasdaq Composite added 0.24 point, or less than 0.01%, to 5901.00. U.S. stocks ended the week higher, with the Dow industrials up 0.1% and the S&P 500 gaining 0.2%.

Government bond prices and bond-like stocks got a boost after the Fed signaled that interest rates could stay low for longer than expected, even as officials continue to gradually nudge them higher.

Utilities stocks in the S&P 500 rose 0.6% on Friday, the best performers in the index, while the real-estate sector, which mainly includes real-estate investment trusts that distribute most of their income to shareholders, climbed 0.2%.

The two sectors, often considered bond proxies for their relatively high dividends, notched weekly gains of 1.3% and 1.7%, respectively.

This past week marked the 16th-consecutive week of inflows into exchange-traded funds that invest primarily in companies that dole out dividends, according to EPFR Global data through Wednesday. During that time, $6.9 billion have flowed into these funds.

The inflows come even as the Federal Reserve has raised interest rates twice and is on pace to raise rates an additional two times in 2017.

The yield on the 10-year U.S. Treasury note declined to 2.500% Friday, according to Tradeweb, compared with 2.526% on the previous day. Yields decline as prices move higher.

Leading up to the central bank meeting, many Fed officials spoke about how the case for raising rates had strengthened due to improving economic data. Their tone sparked worries among some investors that the central bank may be more aggressive and raise rates four times in 2017. That turned out not to be the case.

"The language was dovish enough to give the markets some comfort that we weren't going to see a lot more tightening," said Marc Pinto, portfolio manager at Janus Capital Group.

"I think the dividend and income story does not go away with a higher 10-year yield."

U.S.-traded crude-oil prices added to weekly gains Friday, rising less than 0.1% to $48.78 a barrel. This past week they have gained back 0.6%, after falling more than 9% the prior week because of concerns about resilient output from the U.S. and uncertainty over how much the Organization of the Petroleum Exporting Countries will cut production.

The S&P 500 energy sector ended Friday slightly lower, but posted weekly gains of 0.3%, a slight bounceback from the prior week's 2.6% loss, its worst since September.

Friday brought a surge of end-of-day volume as a host of futures and options contracts are set to expire at the close. The quarterly event, known as "quadruple witching," signals the expiration of index futures, single-stock futures, index options and single-stock options, and can increase volatility in the market.

The dollar slipped Friday, weighed down by investors' expectations of a slower pace of interest-rate increases. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, lost 0.1% to end the week 1.3% lower after the Fed's signals led some investors to reduce their dollar bets. It was the dollar's largest weekly decline since July.

Stocks in Europe ended the week higher, with the Stoxx Europe 600 rising 1.4%. In Asia, the Shanghai Composite added 0.8% in the past week, while the Hang Seng Index gained 3.1%.

--Ira Iosebashvili contributed to this article.

Write to Corrie Driebusch at corrie.driebusch@wsj.com and Aaron Kuriloff at aaron.kuriloff@wsj.com
 

(END) Dow Jones Newswires

March 18, 2017 02:32 ET (06:32 GMT)

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