Wall Street main stock indices closed higher on Friday but recorded weekly losses as investors reacted to fluctuating Treasury bond yields and a lack of clarity regarding progress in the Middle East.
The Dow Jones Industrial Average rose 520.93 points, or 0.99%, to end the session at 53,280.14. The S&P 500 advanced 32.94 points, or 0.43%, to 7,674.10, while the tech-heavy Nasdaq Composite gained 112.20 points, or 0.43%, to close at 26,179.37.
Despite Friday's gains, both the S&P 500 and the Nasdaq broke a three-week winning streak. The Dow registered its second consecutive week of losses.
The S&P 500 is a broad market index tracking major American corporations, while the Nasdaq Composite focuses heavily on technology companies. The Dow Jones Industrial Average is a benchmark following 30 prominent US industrial stocks.
Equity markets in recent sessions were largely guided by movements in US Treasury yields, as potential increases in borrowing costs limited investor risk appetite. Stocks fell on Thursday as yields increased, following a rise on Wednesday when yields declined.
US Treasury Secretary Scott Bessent said on Thursday that the administration could further expand government bond buybacks. His comments followed a surprise announcement on Wednesday that the government would spend twice the expected amount on bond repurchases.
US Treasury bonds are government debt securities used to fund federal operations. When bond yields rise, borrowing costs across consumer and corporate lending tend to increase, often putting pressure on stock valuations.
Economic growth and sector performance
Economic data released on Friday helped soften market anxiety. Figures showed that the strongest growth in the US services sector in nearly two years caused a sharp acceleration in overall business activity in August.
The surge in services offset a slowdown in manufacturing sector growth. Manufacturing expansion has been constrained by reduced inventory accumulation and supply chain disruptions linked to the war in Iran.
Earlier in the week, UBS Global Wealth Management raised its year-end target for the S&P 500 to 8,100 points. The financial firm cited stronger corporate earnings prospects and solid profit growth across businesses.
Most of the 11 primary S&P 500 sectors finished Friday in positive territory. The materials sector posted the strongest gains of the session, while the utilities sector lagged furthest behind.
Oil prices and inflation concerns
Oil futures closed higher for a sixth straight day on Friday, intensifying concerns over inflation. Prices rose after the US president threatened economic sanctions against trade partners of Iran, raising expectations of tighter oil supplies.
For the week, Brent crude futures advanced 6.39%, while US crude oil gained 5.66%.
Crude oil prices directly affect transport and manufacturing costs worldwide. Persistent increases in energy prices can keep inflation elevated, complicating efforts by central banks to manage monetary policy.
Focus turns to earnings and Fed policy
Investor attention next week will shift toward quarterly earnings reports from Nvidia, a leading designer of artificial intelligence microchips. Software companies Intuit, Salesforce, and CrowdStrike are also scheduled to report results.
Markets will also examine the July Personal Consumption Expenditures price index set for release next week. The PCE index is the Federal Reserve's preferred measure of inflation. Milder July readings for consumer and producer prices had previously reduced expectations of an immediate interest rate increase by the central bank.
Investors are also looking ahead to a speech by Federal Reserve Chair Kevin Warsh at the Jackson Hole symposium late next week.
The Federal Reserve serves as the central bank of the United States, responsible for regulating monetary policy and interest rates. Its annual Jackson Hole retreat in Wyoming brings together international central bankers and economists to discuss economic policy.
