Dow ends flat, 157 points short of 20,000

Stocks lost steam Friday as the Dow failed in another attempt at topping the 20,000 mark for the first time ever. 

The Dow Jones industrial average lost less than 0.1%, down 8 points to finish at 19,843.41. The S&P 500 fell 0.2%, while the Nasdaq composite shed 0.4%.

After an initial jolt from the Fed’s interest rate hike decision this week, markets adjusted to the prospect of more increases that policymakers signaled were in store as they move to “normalize” interest rates. The Fed raised rates for only the second time in a decade and hinted three more hikes are on the way in 2017, rattling markets used to ultralow borrowing costs that have fueled a multiyear stock boom. The Fed’s move now shifts the focus from central bank policy to economic growth as the driver of stock market performance.

 “Given the strength of the economy and potential for higher levels of economic growth in the coming years, it would appear rate hikes are no longer met with fear and panic, at least for now,” said Craig Erlam, senior market analyst at OANDA.

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Bond yields gave up some of their big gains from the last few days.The yield on the 10-year Treasury fell to 2.58% from 2.60% late Thursday, putting at least a temporary halt to its strong rally since last month’s presidential election.

Bond yields had been jumping since Donald Trump’s surprise victory on expectations that faster economic growth and inflation may be on the way. The 10-year Treasury yield was at 1.86% on election day.

Yields kept rising this week after the Federal Reserve raised interest rates for only the second time in a decade and said that three more increases may be on the way in 2017.

U.S. crude oil rose a dollar to $51.90 per barrel. 

World stock markets were tepid Friday while the dollar consolidated its gains as investors adjust to the new reality of a future with higher U.S. interest rates.

European shares were higher. France’s CAC 40 rose 0.3% and Germany’s DAX added 0.3%. Britain’s FTSE 100 rose 0.2%. 

Japan’s benchmark Nikkei 225 index rose 0.7%  as the weakening yen helped shares of the country’s exporters. Other Asian indexes were listless. South Korea’s Kospi added 0.3% and Hong Kong’s Hang Seng gave up the day’s gains in the final hour to close 0.2% lower. the Shanghai Composite Index in mainland China gained 0.2%.

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The dollar was hovering at its strongest level in 10 months, easing to 118.24 yen from 118.27 late Thursday. A weaker yen benefits Japan’s exporters by making boosting their earnings when they’re brought back from overseas. The euro fell to its lowest since early 2003, slipping to $1.0435 from $1.0412.