US Stocks Gain Friday but Post Weekly Losses; Bond Yields and Iran in Focus
Key Takeaways
- •The Dow Jones Industrial Average ended Friday's session up 1% after surging as much as 400 points during the day, but the major US indexes still finished the week with losses.
- •Long-dated Treasury yields remained near multi-year highs, and Treasury Secretary Scott Bessent said the government could further increase bond repurchases following Wednesday's surprise intervention.
- •Oil was set for a second consecutive weekly gain as Donald Trump threatened sanctions on Iran's partners, with the Strait of Hormuz carrying roughly a fifth of globally traded crude.
- •Gold rallied to a three-month high on a weaker dollar, with Goldman saying options demand could push prices beyond its $4,900 forecast.
- •Tesla recalled nearly 3 million vehicles in China over door handle safety risks, while a Dutch regulator fined Uber $966 million for automating driver suspensions.
The main US stock indexes closed higher on Friday but posted weekly losses, as investors were rattled by fluctuating government bond yields and a lack of clarity on progress in the Middle East. The advance brought some relief after a week in which swings in long-dated Treasuries unsettled equities, but it was not enough to erase the week's losses across the major averages. The pull of the bond market on stocks is mechanical as much as psychological: long-term yields help set borrowing costs across the economy, from mortgages to corporate debt, and feed into the discount rates investors apply to future earnings.
Wall Street: futures rebound, Dow ends 1% higher
Friday's session traced an arc from caution to broad-based optimism. US equity futures rebounded after a sharp selloff, though weekly losses loomed over the market. Stocks opened higher but remained on track for weekly declines. The Dow Jones Industrial Average jumped more than 250 points shortly after the open and later surged 400 points, before ending the day with a gain of 1% amid broad-based optimism. Live coverage through the session also followed the market's biggest movers, from the Dow Jones and S&P 500 top gainers to Nasdaq top gainers and top losers, as well as the most active stocks on NYSE American.
Treasury yields hold near multi-year highs despite buyback support
Long-dated US Treasury yields remained near recent highs after rattling markets this week, as concerns over mounting government debt, rising financing costs and persistent inflation weighed on sentiment. Treasury Secretary Scott Bessent said the government could further increase bond repurchases following Wednesday's surprise intervention. Buybacks are a relatively new instrument in the Treasury's toolkit, with regular repurchase operations launched in 2024 as a liquidity-management tool for the world's deepest government bond market. Yields extended their rise on Friday following strong US services data. The dollar, meanwhile, hovered near a three-month low on Treasury buyback worries.
Fed clues: PCE inflation and Warsh's Jackson Hole speech
PCE inflation data and Warsh's Jackson Hole speech remained in focus for clues on the Federal Reserve, with markets already on edge after this week's bond-market swings. The personal consumption expenditures price index is the Fed's preferred inflation gauge, and the annual Jackson Hole symposium in Wyoming has a long history as a venue where policymakers have signaled shifts in the policy outlook.
Iran pressure lifts oil toward a second weekly gain
Donald Trump warned of an 'economic D-Day' against Iran, but Tehran is well acquainted with sanctions. Oil rose as Trump threatened sanctions on Iran's partners, and crude was set for a second weekly gain as the US ramps up pressure on Iran. The stakes for crude run through the Strait of Hormuz, the chokepoint that carries roughly a fifth of globally traded oil, keeping prices sensitive to any escalation with Tehran. Elsewhere on the geopolitical front, the US approved a potential $125 million arms sale to South Korea.
Gold rallies to three-month high; zinc at four-year high
Gold rallied to a three-month high on a weaker dollar and bullish technicals. Goldman said options demand could push gold beyond its $4,900 forecast, and Jefferies' Chris Wood sees gold as the second-best hedge amid the Iran war and fiscal risks. Central banks, which have been consistent net buyers of gold in recent years, have added a persistent source of demand alongside investors. Among industrial metals, copper rebounded on the weaker dollar, while zinc reached a four-year high.
Bitcoin and AI in focus
Bitcoin climbed to its highest level since late May, pulling crypto stocks higher; Coinbase jumped nearly 10%, with crypto-linked equities often moving in sympathy with the token. Attention is also turning to Nvidia, the dominant supplier of the processors behind AI data centers, whose earnings are set to test the AI rally after strong sector results. Separately, SNB's Tschudin said artificial intelligence could push up inflation.
Corporate and deal news
Away from the index charts, the day brought a heavy slate of corporate developments. Tesla recalled nearly 3 million vehicles in China — its second-largest market after the US — over door handle safety risks, as Tesla and others began a record vehicle recall in the country. AI cloud firm Nscale is seeking up to $3 billion in a US IPO, Bloomberg News reported. JPMorgan is hiring Bank of America's David Fishman as head of technology M&A, according to a report. Citadel has shed over 80% of the aggregate risk from its Situational Awareness portfolio. A Dutch regulator fined Uber $966 million for automating driver suspensions, a document showed; fully automated decisions affecting individuals face strict rules under Europe's GDPR data-protection regime. Despite the week's pressures, US equity funds drew inflows.
The week in brief
The week closed with equities lower despite Friday's rally, oil on track for a second weekly gain, gold at a three-month high, and the dollar near a three-month low.
