Wall Street's main indices kicked off Friday's session with gains as investors sought to steady sentiment following a sharp selloff driven by surging Treasury yields. The Dow Jones Industrial Average advanced 0.51%, the S&P 500 climbed 0.48%, and the Nasdaq Composite rose 0.46%. Among notable movers, Robinhood surged 7.51%, Coinbase Global jumped 6.06%, Freeport-McMoRan gained 5.30%, Strategy added 5.29%, Ross Stores advanced 5.18%, and Albemarle climbed 4.33%. In the "Magnificent Seven" cohort, Tesla rose 1.45%, Nvidia gained 0.53%, Apple edged up 0.15%, Alphabet advanced 0.13%, while Amazon slipped 0.12%, Meta Platforms dipped 0.15%, and Microsoft declined 0.30%.
The uptick follows a downbeat trading day, with Treasury yields resuming their climb despite government efforts to curb the bond market selloff. Concerns that rising oil prices could stoke inflation continue to weigh on fixed-income securities, particularly longer-dated Treasuries. On Thursday, the S&P 500 and Nasdaq Composite each fell 0.9% and 1%, respectively. After that pullback, the S&P 500 is down 1.9% for the week, and the Nasdaq has shed 2.5%, with both indices poised to snap three-week winning streaks. The Dow has slipped 1.8% week-to-date, on track for its second consecutive weekly decline.
"Unlike the Federal Reserve's quantitative easing, the U.S. Treasury cannot print money to fund asset repurchases," wrote Ulrike Hoffmann-Burchardi, chief investment officer for the Americas at UBS. "Any Treasury buybacks must be financed through alternative sources, most likely via increased short-dated bill issuance or adjustments to other financing programs."
"In effect, the operation merely alters the maturity structure of the debt investors hold without reducing the overall supply the market must absorb. It neither eliminates the government's funding needs nor resolves concerns about excess Treasury supply," she added.
The week's market downturn also spilled over to equities outside the U.S. The MSCI All-Country World Index is poised to fall 1.5% this week, marking its steepest weekly drop in five weeks. European shares ticked higher in early Friday trading, though major exchanges and sectors opened mixed. The pan-European Stoxx 600 was last up 0.1%, London's FTSE 100 held roughly flat, and Germany's DAX gained 0.2%. In Asia, Japan's Nikkei 225 closed down 0.30%, South Korea's KOSPI rose 0.88%, Australia's S&P/ASX 200 fell 0.27%, and China's CSI 300 ended 0.57% higher.
December gold futures touched $4,569.40 per ounce, the highest level since May 15. The contract is on track for a fifth consecutive weekly gain, its longest winning stretch since October 2025. Gold has climbed nearly 5% this week, extending its rebound from a sharp second-quarter selloff.
Bitcoin jumped as much as 9.4%, eyeing its best weekly performance since 2023. The rally was fueled largely by a short squeeze after Bessent announced an expansion of long-dated Treasury buyback operations this week. Bank of America data showed U.S. equity funds attracted approximately $29 billion in inflows during the week ended August 19, the largest weekly intake in three weeks.
Strategist Michael Hartnett noted that if U.S. intervention in the bond market fails to push the 30-year Treasury yield "below 5%," it could further weaken the dollar and prompt investors to reposition ahead of the midterm elections. He expects markets to shift toward shorting risk assets, reducing leverage, and trimming cyclical exposure. This suggests that if yields fail to decline sustainably, markets could pivot back into defensive mode.
Brent crude, meanwhile, was on track for its first drop in six sessions. Bessent also drew attention by reaffirming his commitment to intensify the Trump administration's "economic war" on Iran, vowing to impose "the harshest sanctions in history" on the country. That threat further dampened hopes for a full reopening of the Strait of Hormuz, pushing Brent near a one-month high of roughly $95 per barrel before profit-taking pulled prices back.
UBS has lifted its earnings forecasts for the S&P 500, citing improved corporate profit prospects and growing confidence in next year's economic growth. The bank now projects S&P 500 earnings per share of $350 for 2026 and $400 for 2027, up from prior estimates of $335 and $375, respectively, implying growth rates of 25% and 14%. Additionally, UBS raised its S&P 500 price targets to 8,100 by December 2026 and 8,400 by June 2027.
The bank attributed the upgrades primarily to better-than-expected earnings from semiconductors, tech hardware, and energy sectors, though profit estimates were revised higher across nearly all market segments. UBS noted that the breadth of the market rally continues to expand, with an exceptionally strong second-quarter earnings season and improving cyclical conditions in areas like manufacturing activity and construction employment.
Comments