MARKET SNAPSHOT
U.S. stocks were mixed as inflation and Middle East war trepidation offset optimism about the AI boom. Treasury yields rose as markets reprice the outlook for interest rates. The dollar lost some steam, particularly against the Japanese yen, as markets priced in central bank decisions with an uncertain outlook. Oil prices fell and gold prices rose.
MARKET WRAPS EQUITIES
A volatile week that battered Wall Street with relentless headlines ended with a whimper.
AI leaders called for a slowdown, the 10-year Treasury yield hit 5% and the Federal Reserve raised interest rates for the first time in three years. But while a tech rally helped stocks stage a brief comeback on Thursday, the major U.S. indexes showed little movement in either direction on Friday as investors continue to weigh the implications of higher borrowing costs.
"Bond yields fell yesterday-stocks liked it.," said Bob Doll, chief investment officer at Crossmark Global Investments. "Bond yields are going up today (Friday)-stocks don't like it."
"It's the bond market that's leading the stock market today and much of this week."
On Friday, stocks fluctuated between modest gains and losses. The S&P 500 edged higher by 0.2%. The Dow Jones Industrial Average lost 0.2%. The tech-heavy Nasdaq Composite rose 0.4%, buoyed by a rebound in AI stocks
For the week, the Dow declined 1.7%, marking its third straight weekly loss. The S&P 500 registered its second weekly loss in a row, falling less than 0.1%. The Nasdaq eked out a gain of 0.7%.
Some investors are bracing for more volatility in the stock market ahead. Fed officials on Wednesday penciled in at least one more increase this year, and Fed Chairman Kevin Warsh's hawkish remarks on inflation have led traders to bet on additional rate hikes in the coming months. That, plus elevated oil prices and rising bond yields, could weigh on equities and eventually risk slowing down the economy, they say.
"It's rare to have a single rate hike and then nothing going forward," said Chris Brigati, chief investment officer at SWBC. "I'd say we're closer to the top than the bottom of the market in terms of for the next three-month period or so."
Elsewhere Friday, Asian equities rose and regional bond yields declined as easing oil prices helped temper inflation concerns.
The Bank of Japan raised its benchmark interest rate to a 30-year high of 1.25% and signaled that further increases are likely. The Nikkei Stock Average climbed 1.4%.
For investors, the key is to view the BOJ's actions as a normalization of policy rather than a tightening cycle, said Michiko Sakai, a Tokyo-based Japanese equities portfolio manager at J.P. Morgan Asset Management.
China's Shanghai Composite Index added 0.9% while the Shenzhen Composite Index gained 1.7%. The tech-focused ChiNext Price Index jumped 2.3%. Hong Kong's Hang Seng rose 0.6%.
South Korea's Kospi leapt 2.7% amid strength in chip stocks.
Australia's S&P/ASX 200 held steady. New Zealand's S&P/NZX 50 Index slipped 0.1%.
COMMODITIES
Oil futures ended a frantic week little changed with prices easing back after a midweek rise to four-month highs on disruptions to Saudi Arabia's East-West pipeline.
Reports that the pipeline could resume partial flows within days helped futures to pull back, while concerns remain about the Middle East conflict dragging on and shipping restrictions through the Strait of Hormuz.
WTI settled down 1.6% at $100.30 a barrel on Friday, but gained 0.2% for the week. Brent fell 0.9% to $103.87 a barrel and ended the week down 0.7%.
Gold futures settled higher on the day and on the week, holding their ground despite the rise in Treasury yields and the Fed's first interest-rate increase since 2023.
Gold and silver are "once again holding key support levels--a positive sign that the metals' rally may be poised to gain traction despite the higher cost of money," Peter Cardillo of Spartan Capital said.
Front month gold settled up 0.6% in New York at $4,385.90 a troy ounce, up 0.5% from a week ago. Silver rose 1.7% to $66.556 a troy ounce for a 3.1% weekly gain.
TODAY'S TOP HEADLINES
Two-Year U.S. Treasury Yield Reaches New Multi-Year High
The two-year U.S. Treasury yield rose as markets grew more confident the Federal Reserve could raise interest rates to fight inflation.
The two-year yield touched 4.744% on Friday, its highest intraday yield since July 2024 when it hit 4.775%.
The Fed raised rates Wednesday and Chairman Kevin Warsh's remarks left markets under the impression that more increases could come.
Week Ahead for FX, Bonds: U.S. PMI Data, Various Central Bank Decisions in Focus
U.S. provisional purchasing managers' surveys for September are due in the coming week, providing an update on current economic activity as investors digest Wednesday's interest-rate hike by the Federal Reserve and assess the prospect of more to come.
PMI data are also due in the eurozone and the U.K., while interest-rate decisions are due in Switzerland, Sweden, Norway, Mexico and South Africa.
In Asia, central-bank decisions and key economic data will take center stage as investors assess the region's policy outlook amid persistent global inflation concerns. China will announce its benchmark lending rates, while Bank Indonesia holds a rate-setting meeting.
The U.S. and China Want AI Guardrails. But Their Ideas Couldn't Be More Different.
With apocalyptic fears over artificial intelligence reaching a fever pitch, the world's two most powerful leaders-President Trump and China's Xi Jinping-plan to discuss the technology at a summit in Washington next week.
The tension is that the U.S. and China are in a heated race to dominate AI and view safety issues very differently.
In the U.S., the discussion has centered on guarding against a powerful model that slips beyond human control, an autonomous weapon that acts on its own, or a tool potent enough to help a rogue actor build a weapon. Trump has played down the need for regulatory guardrails, but prominent American AI executives are calling for a slowdown in development to weigh safety first.
Anthropic Shifts Planned IPO to November
Anthropic plans to stage its blockbuster initial public offering in November, later than many investors expected, as leaders of the biggest companies in the artificial-intelligence race call for a slowdown in the development of the technology.
The AI giant had been expected to stage a record-breaking offering in October, according to people familiar with the matter. Some of Anthropic's advisers say waiting until November would give the startup time to share third-quarter financials that show a strong competitive position, even after rival OpenAI launched its newest model, Astra, in September.
Some of the people familiar with the timing say the decision to aim for a November offering was made before a public warning from a former Anthropic researcher set off a debate about whether AI advancements are moving too fast. They caution the timing could still change.
Nvidia-Backed Cloud Startup Nscale Files for IPO
Nvidia-backed cloud computing company Nscale filed for an initial public offering.
The U.K.-based company didn't say how many shares it would offer, or at what price, according to a Friday filing with the Securities and Exchange Commission.
The startup, which operates a series of data centers in the U.S. and Europe, is backed by Nvidia, Dell Technologies, and Nokia, as well as Aker, a Norwegian industrial investment group. It raised $2 billion at a $14.6 billion valuation earlier this year.
Automakers Urge Trump Not to Allow Chinese Cars Into U.S. Ahead of Xi Summit
A coalition of auto-industry groups urged President Trump to keep Chinese cars out of the U.S. ahead of a meeting with leader Xi Jinping, saying any entry by Chinese newcomers would undermine jobs and national security.
In advance of Trump's state dinner next week with Xi, the group-including the Alliance for Automotive Innovation and the National Automobile Dealers Association-implored the president to "maintain policies that keep the door firmly shut to Chinese automakers seeking to sell, import or manufacture vehicles inside the U.S."
"Allowing them to open a domestic facility would provide a foothold in the U.S. market at the expense of manufacturers operating here," the coalition wrote in a letter sent Thursday to Trump.
Expected Major Events for Monday 00:00/SKA: Sep Trade data - 1st 20 days of month
03:00/NZ: Aug Credit card statistics
08:30/HK: 2Q Balance of Payments
09:59/CHN: People's Bank of China loan prime rate (LPR) announcement
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