U.S. stocks fell on Friday on speculation that rising U.S.-Iran tensions would turn investors to Treasury debt for its perceived safety, while the dollar fell on expectations for higher European interest rates, Reuters reported. Government bonds also rallied on speculation that a sharp rise in subprime mortgage delinquencies would curb U.S. economic growth and lead the Federal Reserve to lower its target interest rate this year. A jump in oil prices above $61 a barrel fed expectations for slower growth and lower rates, hurting shares of energy-reliant bellwether companies including General Electric Co., United Technology Corp. and Caterpillar Inc. Financial company shares such as Bank of America Corp. were the biggest drag on the Standard & Poor's 500 Index, whose financial component suffered the biggest fall in more than a month. Lenders have come under pressure amid a rapid rise in mortgage delinquencies and the failure or sale of more than 20 companies that cater to the riskiest borrowers. The Dow Jones industrial average was down 43.26 points, or 0.34 percent, at 12,642.76. The Standard & Poor's 500 Index was down 6.07 points, or 0.42 percent, at 1,450.31. The Nasdaq Composite Index was down 9.81 points, or 0.39 percent, at 2,515.13. The benchmark 10-year U.S. Treasury note was up 16/32 in price, pushing the yield down to 4.67 percent from 4.73 on Thursday. The 2-year note was up 4/32, with the yield at 4.80 percent against 4.87 Thursday. The 30-year bond was up 30/32 to yield 4.77 percent against 4.83 percent Thursday. Bond prices move inversely to yields. The dollar fell against the euro and yen after German economic data supported the case for higher European interest rates and as investors pared bets on further declines by the weakened Japanese currency.
