Key Takeaways
- The Dow declined 0.2% on Friday, marking its third consecutive weekly drop.
- The S&P 500 climbed 0.2%, and the Nasdaq advanced 0.4%.
- The 10-year Treasury yield closed the week marginally under 5%.
- The Federal Reserve implemented a 25 basis point interest rate increase this week.
- Crude oil retreated below $100 per barrel while chip stocks bounced back from midweek declines.
U.S. equity markets concluded Friday’s session on a mixed note as traders digested elevated interest rates, bond yields approaching the 5% threshold, and persistent inflation concerns.
The Dow Jones Industrial Average slipped approximately 0.2% to settle at 51,682.64.
The pullback marked the Dow’s third straight weekly retreat and represented its poorest weekly performance since March.
The S&P 500 advanced 0.2% on Friday, finishing at 7,650.50, though it still recorded a modest weekly decline.
The Nasdaq Composite climbed roughly 0.4% and managed to secure a weekly gain.
Bond Yields Surge Following Federal Reserve Policy Move
Rising bond yields continued to weigh heavily on equity markets.
The 10-year Treasury yield concluded the week at 4.995%, stopping just short of the psychologically significant 5% level.
The 2-year Treasury yield finished at 4.741%, marking its highest 3 p.m. settlement since July 1, 2024, based on Dow Jones Market Data.
The yield spike came after the Federal Reserve announced Wednesday that it would lift its benchmark interest rate by 25 basis points.
The move represented the Fed’s first rate elevation in three years.
Market participants are now evaluating the likelihood of additional rate hikes. According to CME FedWatch data, there’s a 47.1% chance of another quarter-point hike and a 42.4% probability of a cumulative half-point in additional increases by December.
Investors continue monitoring inflation closely after recent energy price surges intensified cost pressures for consumers and businesses.
JPMorgan Chase CEO Jamie Dimon commented to Yahoo Finance this week that uncertainty remains about whether inflation has been effectively contained.
Crude Retreats While Technology Shares Stage Comeback
Oil prices offered some market relief Friday by dropping back under $100 per barrel after previously surging above that threshold.
Energy markets continue facing volatility from supply disruptions related to the Iran conflict and potential interruptions to tanker traffic through the Strait of Hormuz.
Technology stocks outperformed most other market sectors.
Semiconductor shares rebounded from earlier weekly losses, with the PHLX Semiconductor Index ending the week marginally positive.
Chip manufacturers had faced selling pressure following announcements from Anthropic and OpenAI advocating for reduced AI development speed due to safety considerations.
Morgan Stanley Wealth Management portfolio manager Daniel Skelly noted that crude oil fluctuations, elevated bond yields, and the approaching U.S. midterm elections could sustain near-term market turbulence.
Market attention now shifts to Treasury yield movements, oil price trends, and speculation surrounding the Federal Reserve’s October policy meeting following the Dow’s third straight weekly decline.
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