By Stephen Culp and Niket Nishant
NEW YORK, Sept 18 (Reuters) - Wall Street closed a tumultuous week on a muted note on Friday as benchmark US Treasury yields topped 5%, and crude prices reversed earlier gains but remained above $100 per barrel, keeping inflation worries front and center.
Investors approached the end of a week that was essentially split in two: first, restless anticipation in the days before the US Federal Reserve's widely expected interest rate hike, and then the aftermath of that decision.
A semiconductor rally helped US equities avoid a significant selloff.
"It's almost as if everybody got to the end of the week and got exhausted from all the activity this week and decided to just play it close to the vest here," said Chuck Carlson, chief executive officer of Horizon Investment Services in Hammond, Indiana. "A lot of investors are trying to figure out not just the short-term implications, but longer-term implications of what the Fed may be embarking on and how that's going to impact equities and fixed-income investments."
There is also a "reluctance to be positioned in any directional way going into the weekend in an environment where exogenous events could potentially set up some crazy trading patterns on Monday," Carlson added.
Inflation concerns remained prominent as crude prices settled above $100 per barrel, but they eased back from session highs after China, at the request of Saudi Arabia, asked Iran to limit attacks by Houthi rebels on Saudi oil infrastructure.
Soaring oil prices have sent diesel prices to record levels, which is likely to translate into broader inflationary pressures affecting farming and shipping costs.
"The market seems to be closely tied to movements in oil prices," Carlson said. "So when they are trending higher for any short period of time, I think you get a little bit more of a respite in the market."
Central banks around the globe have embarked on a policy-tightening cycle to rein in inflation fueled by the Iran war.
The Bank of Japan lifted interest rates to a 31-year high, following in the footsteps of the Federal Reserve and the European Central Bank, in an effort to control global inflation. The Bank of England was the outlier, holding rates firm but warning of future hikes.
Financial markets are currently pricing in more than a 50% probability of another Fed rate hike at the central bank's October meeting, up from 42.5% last Friday and 7.2% a month ago, according to CME's FedWatch tool.
According to preliminary data, the S&P 500 gained 11.53 points, or 0.12%, to end at 7,647.19 points, while the Nasdaq Composite gained 92.72 points, or 0.35%, to 26,511.01. The Dow Jones Industrial Average fell 114.74 points, or 0.22%, to 51,663.30.
Berkshire Hathaway announced that Warren Buffett will step down as chairman to become chairman emeritus, nine months after handing the CEO position to Greg Abel.
Xenon Pharmaceuticals tumbled after it temporarily paused enrollment in clinical studies testing its experimental drug for major depression and bipolar disorder, following reports of side effects.
Cryptocurrency-linked firms Coinbase, Strategy and Robinhood all surged as bitcoin prices jumped.
The quarterly expiry of derivatives contracts tied to stocks, index options and futures, known as "triple witching," likely contributed to heightened late-session volatility.
(Reporting by Stephen Culp in New York; Additional reporting by Niket Nishant and Tharuniyaa Lakshmi in Bengaluru; Editing by Matthew Lewis)
