U.S. stocks finished little changed on Friday, with the S&P 500 and Dow industrials not far from record highs, as Wall Street pondered the impact of increased borrowing costs on the economy.
Higher rates "are not, on their own, something to fear," emailed Dan Greenhaus, chief strategist at BTIG LLC.
"Don't let your profits ride, take some of your winnings off the table and see what happens with interest rates. If this economy can handle the rise in interest rates, then 2014 will be off to the races," said Nick Raich, CEO of the Earnings Scout.
"Stock prices are at record highs because earnings are at record highs. A lot of people talk about the market being disconnected from earnings. The question is would these earnings be at record highs if policies weren't accommodative. The reality is the Fed is in there. The earnings are real, how much of it is propped up by the central banks, we're going to find out very soon," said Raich of the Federal Reserve's Dec. 18 announcement that it would cut the rate of its bond purchases.
After the best six-session stretch in more than three years, the Dow Jones Industrial Average ended at 16,478.41, down 1.47 points, with Boeing leading losses and Cisco Systems the best performing of of its 30 components.
The S&P 500 fell less than 1 point to 1,841.40, with consumer discretionary losing the most and consumer staples faring the best among its 10 major sectors.
The Nasdaq fell 10.59 points, or 0.3 percent, to 4,156.59.
Advancers ran just ahead of decliners on the New York Stock Exchange, where volume was minuscule with many participants on holiday. Nearly 424 million shares traded and composite volume just surpassed 2 billion.
Twitter declined sharply after Macquarie Capital downgraded the social-networking company to underperform from neutral; shares of Delta Air Lines were hit after an error on the carrier's website resulted in heavily discounted fare. General Motors dipped after news its China joint venture would recall nearly 1.5 million vehicles because of potential safety issues, while Textron advanced after it agreed to acquire aircraft manufacturer Beechcraft for $1.4 billion in cash.
After hitting its highest since July 2011, the 10-year Treasury note yield, used in figuring mortgage rates and other consumer loans, was lately up 1 basis point at 3 percent.
"If the U.S. economy is going to perform better in 2014 than 2013 -- and we expect it will -- then yields will have to move higher. Not because of the Fed tapering (although that's part of it) but because that's just what happens," added Greenhaus, referring to the 10-year Treasury note, the yield of which on Thursday pulled above 3 percent for the second time this year.
The dollar fell against the currencies of major U.S. trading partners, while dollar-denominated commodities including gold and oil rose, with the latter topping $100 a barrel for the first time since Oct. 21.
On Thursday, equities continued their record-setting advance after data cast a favorable light on the jobs market, with Wall Street also taking the 10-year Treasury note's ascent to 3 percent in stride.
—By CNBC's Kate Gibson
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