Where in North Carolina are you located and how have you been watering?

Assuming you have nutsedge, then I believe you're watering wrong. How often and how long do you water?

I live in Raleigh. Since seeding I was watering every morning to keep the top inch of soil moist. I stopped that about 5 days ago when I was told by a neighbor that it didn't need that much water and the yellow spots were beginning. After putting down the fertilizer last week, I watered the next two mornings. I haven't watered since and was going to start watering twice a week for an hour to every area of the lawn.

The reason I asked where you live is because I'm in Holly Springs. I have an established Bermuda lawn and if we don't get rain in the next few days I will have to water. We had been getting fairly regular rain showers in the month of June but that stopped about a week and a half ago. I say all that to say you probably need more water. Mother nature had been helping you out earlier but not much as of late.

the yellow started while I was still watering every morning about an inch into the soil. Do you think by that point the lawn had been established and I needed deeper watering?

It is time to adjust your watering. Set some cat food or tuna cans out in the yard and turn on the water. Time how long it takes to fill up the cans. That is your target time. For now cut that time in half and water twice a week. After two weeks then cut back to every 5 days for the full time. After two weeks of that back off to once every 7 days. When temps drop back into the 80s you can back off to watering every 10 days to 2 weeks.

I'm concerned about what you said about fertilizer. Did you water the fertilizer in right away or wait until the next day? Waiting is a no-no for chemical fertilizers. The purpose of watering right away is to create a diluted solution which washes into the top of the soil. By waiting you allowed the dew to create a strong salty solution which sat right on top of the plants. Bermuda is tough but not that tough. Did the browning seem to get worse when you fertilized?