Rising U.S. Treasury yields are triggering a chain reaction across financial markets, and Wall Street is set to close out a volatile week, with major U.S. stock indexes edging slightly higher on Friday.

The Dow Jones Industrial Average rose 0.10%, the S&P 500 gained 0.05%, and the Nasdaq added 0.15%.

Akamai (AKAM) led the tech sector higher. The company secured a massive $11.6 billion deal with Anthropic, sending its shares surging 19%. Other tech stocks such as Fastly (FSLY) and Cloudflare (NET) also posted gains.

Among the "Magnificent Seven": Tesla rose 1.96%, Nvidia gained 0.30%, Google added 0.19%, Microsoft edged up 0.11%, Apple ticked up 0.01%, Amazon fell 0.51%, and Meta Platforms dropped 1.83%.

Market sentiment was also buoyed by retreating oil prices. Markets are optimistic that the Strait of Hormuz may reopen; Iranian Foreign Minister Abbas Araghchi said that if the U.S. accepts Iran's conditions, Iran is willing to pursue diplomatic efforts and restart U.S.-Iran nuclear talks within seven days. According to reports, negotiators from both countries in New York are considering a phased agreement to defuse the Middle East conflict. U.S. WTI crude oil futures fell 2% to around $92 per barrel, while international benchmark Brent crude futures dropped 1% to around $104 per barrel.

As of Thursday's close, the Dow was down 0.6% for the week, on track for its fourth consecutive weekly decline. The S&P 500 has gained 0.7% so far this week, while the Nasdaq is up 1.6% for the week.

The bond market has also been turbulent. On Thursday, the 10-year U.S. Treasury yield climbed to a recent high, while the 30-year Treasury yield hit its highest level since 2004; the latest quotes edged slightly higher to 5.183% and 5.478%, respectively. Federal Reserve Governor Michael Barr's remarks, persistently elevated energy prices caused by the Iran conflict, and a strong PMI report all contributed to the rise in Treasury yields this week. According to CME's FedWatch tool, federal funds futures show about a 66% probability of a Fed rate hike in October. The mortgage reference rate tracking the 10-year Treasury rose to 7.45%, the highest since 2024. With midterm elections approaching, household borrowing costs are expected to rise.

Morgan Stanley economist Heather Berger wrote in a client research note: "Even before the market volatility of recent days, the downward trend in annualized credit card rates and auto loan rates from mid-2024 to early 2026 had already stalled, and mortgage rates have resumed accelerating upward." She added: "We expect these pressures to weigh on consumption primarily through the goods sector, which is the main reason we forecast real consumption growth to slow by 40 basis points next year."

A 5% Treasury yield may become the norm or even a floor. As U.S. Treasury yields break through one high after another, Wall Street and Washington are increasingly aware of a reality: this may not just be a bond market selloff, but a fundamental shift. Multiple factors are driving up the U.S. government's borrowing costs, including $100-per-barrel oil, the AI investment boom, and a massive budget deficit that has pushed debt to a record $40 trillion. Meanwhile, the Fed remains determined to bring down inflation that has stayed above target for years. Today, nearly all benchmark Treasury yields are hovering around 5% or higher. More than half of market participants are betting the 30-year Treasury yield will hit 6% by year-end. A 5% 10-year Treasury yield is not a historical high, but it is enough to force markets to reassess the long-term neutral rate. A previous Bloomberg survey of market participants showed that more than half of respondents expect the 30-year Treasury yield could reach 6% by year-end. This does not mean 6% will necessarily be reached, but it reflects growing concerns about long-term rates continuing to rise. At the same time, a 5% yield also makes Treasuries more attractive to long-term capital. Compared with the low-rate environment after the financial crisis, U.S. Treasuries now offer higher nominal returns, and some funds may therefore reallocate toward fixed-income assets. As a result, the key going forward is not just inflation and the Fed, but also the scale of U.S. fiscal financing and whether the market can continue to absorb new Treasury supply. If stable buyers continue to shrink and the share of price-sensitive capital rises further, Treasury yields could react more violently to market shocks.

Goldman Sachs Asset Management is underweight large cloud service providers and expects the wave of debt issuance to continue. Goldman Sachs Asset Management believes that with a flood of new debt hitting the market, the firm is currently underweight the companies borrowing the most in the AI space, and expects hyperscale cloud service providers to issue even more debt. Lindsay Rosner, head of multi-sector fixed income investing at Goldman Sachs Asset Management, said in a media interview on Thursday: "We think hyperscalers will issue a lot of bonds. We are overall underweight the sector because we know there will be more supply." Rosner said: "This has been the case throughout the year, with new issuance replacing existing bonds."