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.
The yield on the 10-year Treasury note, which hit a 19-year high earlier in the week, continued to hover around 5%, ticking up to 4.995%. The 2-year Treasury yield rose to 4.741%, the highest close since July 2024.
"Bond yields fell yesterday-stocks liked it," said Bob Doll, chief investment officer at Crossmark Global Investments. "Bond yields are going up today-stocks don't like it. It's the bond market that's leading the stock market today and much of this week."
For the week, the Dow Jones Industrial Average closed in the red for its third straight week, declining 1.7%. The S&P 500 registered its second weekly loss in a row, falling less than 0.1%. The Nasdaq Composite eked out a gain of 0.7%.
On Friday, stocks fluctuated between modest gains and losses. The S&P 500 edged higher by 0.2%. The Dow lost 95 points, or 0.2%. The tech-heavy Nasdaq rose 0.4%, buoyed by a rebound in AI stocks.
The PHLX Semiconductor index, stuffed with AI darlings such as Broadcom and Micron Technology, gained 2.8%.
Despite September's being a traditionally weak month for equities, stocks have held up surprisingly well while confronting a wall of worry built on sticky inflation, war-fueled rising energy prices, the Fed's interest-rate hike and AI anxiety. Investors credit that resilience largely to corporate America's robust earnings and underlying economic strength.
The estimated third-quarter earnings growth rate for the S&P 500 stands at 28.9%, which would mark the third straight quarter of growth above 25%, according to FactSet.
Oil prices fell for the third straight day after rising earlier in the session. Brent crude futures were down 0.9%, and now trade at around $104 a barrel.
Still, 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 than the bottom of the market in terms of for the next three month period or so."
In corporate news, Warren Buffett stepped down as chairman of Berkshire Hathaway and appointed his son Howard to succeed him. Berkshire's popular Class B shares rose 0.1% Friday.
Bitcoin broke above $80,000 on Friday, lifting shares of crypto-linked stocks. The largest cryptocurrency traded at $81,198 as of 4 p.m. ET, up more than 6% from its 4 p.m. ET level on Thursday. Coinbase Global, the largest U.S. crypto exchange, gained 12%. Strategy, the bitcoin-accumulation firm founded by Michael Saylor, jumped 16%.