US Markets Rebound on Friday but End Week Lower Amid Bond Yield Volatility and Middle East Tensions

Although US stock indices closed higher on Friday, they ended the week lower overall as volatile Treasury bond yields and rising Middle East tensions dampened investor sentiment.

Market Summary & Index Performance

• Dow Jones Industrial Average: Rose 520.93 points (+0.99%) to 53,280.14 (posted its second consecutive weekly loss).

• S&P 500: Advanced 32.94 points (+0.43%) to 7,674.10 (snapped a 3-week winning streak).

• Nasdaq Composite: Gained 112.20 points (+0.43%) to 26,179.37 (snapped a 3-week winning streak).

Key Market Drivers

1. Treasury Yield Volatility & Government Interventions

   • Stocks seesawed during the week following shifts in government bond yields.

   • U.S. Treasury Secretary Scott Bessent announced that the government would spend double the expected amount on bond buybacks and noted potential increases in Treasury repurchases to help curb rising borrowing costs.

2. Strong Services Data Offsets Manufacturing Slowdown

   • August economic indicators revealed the fastest growth in the U.S. services sector in nearly two years.

   • This service-sector surge helped offset slowing manufacturing growth, which faced pressure from supply chain disruptions linked to the conflict with Iran.

3. Middle East Conflict & Rising Oil Prices

   • Oil futures rose for a sixth straight day following threats of economic sanctions against Iran’s trading partners by U.S. President Donald Trump, exacerbating inflation fears.

   • Weekly Oil Gains: Brent crude futures climbed 6.39%, while U.S. West Texas Intermediate (WTI) crude gained 5.66%.

4. Sector & Individual Stock Highlights

   • Top Sectors: Materials led sector gains on Friday, while Utilities underperformed.

   • Notable Stocks: Ross Stores gained after raising its annual profit forecasts. Robinhood, Coinbase Global, and Strategy posted sharp gains as Bitcoin climbed to its highest levels since mid-May.

   • Upward Price Targets: UBS Global Wealth Management raised its year-end target for the S&P 500 to 8,100, citing robust corporate earnings growth.

Looking Ahead

• Upcoming Earnings: Markets will closely monitor quarterly reports from key AI and tech leaders, including Nvidia, Intuit, Salesforce, and CrowdStrike.

• Key Economic Indicators: Investors are awaiting July’s Personal Consumption Expenditures (PCE) price index—the Federal Reserve’s preferred inflation metric.

• Jackson Hole Symposium: Attention turns to Fed Chair Kevin Warsh’s upcoming address at the Jackson Hole symposium for further interest rate guidance.