The S&P 500 and Nasdaq ended a three-week winning streak, while the Dow Jones Industrial Average marked its second consecutive weekly loss. Investors reacted to fluctuating U.S. government bond yields, which influenced market movements throughout the week.
The equity markets experienced a seesaw week, with stocks declining on Thursday as bond yields rose, only to advance on Wednesday when yields fell. U.S. Treasury Secretary Scott Bessent's announcement of increased Treasury repurchases added to market dynamics. Economic data released on Friday showed robust growth in the U.S. services sector, which helped offset manufacturing slowdowns caused by supply disruptions from the Iran conflict.
UBS Global Wealth Management raised its year-end target for the S&P 500 to 8,100, citing strong corporate earnings and profit growth. Meanwhile, oil futures continued their upward trajectory, with Brent futures gaining 6.39% and U.S. crude rising 5.66% for the week, amid geopolitical tensions with Iran.
“Markets are taking a bit of a breather. It's a pretty calm day.”
Chris Zaccarelli, Chief Investment Officer at Northlight Asset Management
Preliminary data revealed that the S&P 500 gained 32.94 points, or 0.43%, to close at 7,674.10, while the Nasdaq Composite rose 112.20 points, or 0.43%, to 26,179.37. The Dow increased by 520.93 points, or 0.99%, to 53,280.14. Among the S&P 500 sectors, materials led the gains, while utilities lagged.
In individual stocks, Ross Stores saw a rally after raising its annual profit forecasts, and retail investor platform Robinhood also surged. Crypto exchange Coinbase Global and bitcoin-hoarder Strategy experienced gains as bitcoin reached its highest levels since mid-May.
Background
The U.S. stock market has been sensitive to bond yield fluctuations as investors weigh the implications of potential interest rate changes. The ongoing geopolitical tensions with Iran have further complicated market dynamics, influencing oil prices and investor sentiment.
Looking ahead, investors will focus on quarterly results from Nvidia and software companies like Intuit, Salesforce, and CrowdStrike. Key data releases next week include July's Personal Consumption Expenditures price index, a critical inflation gauge for the Federal Reserve. Additionally, Fed Chair Kevin Warsh's speech at the Jackson Hole symposium will be closely watched for insights into future monetary policy.
