By Stephen Culp and Niket Nishant
NEW YORK, Sept 18 (Reuters) - Wall Street closed a volatile week on a muted note on Friday as benchmark US Treasury yields topped 5%, while crude prices reversed earlier gains but remained above $100 per barrel, keeping inflation worries front and center.
The session capped 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, followed by the aftermath of that decision.
A semiconductor rally boosted the Nasdaq and the S&P 500, but broader weakness pulled the Dow to a lower close.
The S&P 500 ended the session with a nominal weekly loss, while the tech-laden Nasdaq closed higher than last Friday's finish. The blue-chip Dow suffered its biggest weekly percentage decline since March.
"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 a 55.4% 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.
The Dow Jones Industrial Average fell 95.40 points, or 0.18%, to 51,682.64, the S&P 500 gained 12.74 points, or 0.17%, to 7,650.50 and the Nasdaq Composite gained 104.25 points, or 0.40%, to 26,522.55.
Among the 11 major sectors in the S&P 500, technology stocks gained the most, while utilities ended with the steepest percentage loss.
Berkshire Hathaway announced that Warren Buffett will step aside as chairman to become chairman emeritus, nine months after handing the CEO position to Greg Abel. The holding company's shares edged lower on the day.
Xenon Pharmaceuticals tumbled 30.7% after it temporarily paused enrollment in clinical studies testing its experimental drug for major and bipolar depression, following reports of side effects.
Cryptocurrency-linked firms Coinbase, Strategy and Robinhood gained between 9.1% and 16.4% as bitcoin prices jumped 5.9%.
Declining issues outnumbered advancers by a 1.78-to-1 ratio on the New York Stock Exchange. There were 92 new highs and 346 new lows on the NYSE.
On the Nasdaq, 1,973 stocks rose and 2,810 fell as declining issues outnumbered advancers by a 1.42-to-1 ratio.
The S&P 500 posted five new 52-week highs and 30 new lows while the Nasdaq Composite recorded 45 new highs and 162 new lows.
Volume on U.S. exchanges was 25.29 billion shares, compared with the 16.19 billion average for the full session over the last 20 trading days.
(Reporting by Stephen Culp in New York; Additional reporting by Niket Nishant and Tharuniyaa Lakshmi in Bengaluru; Editing by Matthew Lewis)
