The S&P 500 closed higher on Friday as financial stocks edged higher after benchmark Treasury yields hit a nearly three-year high. The Nasdaq closed lower, and stocks showing technology and other big growth lost most of the time, but recovered from lower levels on the back of a rally seen later in the session. The Nasdaq and the S&P 500 were up 2% and 1.8%, respectively, in the week, and the Dow saw a modest 0.3% gain.
The financial sector of the S&P 500 gave the biggest boost to the S&P 500 on Friday. It gained 1.3%, while the technology and consumer sectors closed the day at lower levels.
Investors are assessing how aggressive the Federal Reserve will be as Fed Chair Jerome Powell said this week that the central bank needs to take “rapid” measures to tackle high inflation and that May had expressed the possibility of a 50-basis-point increase in rates.
The US Treasury yield jumped on Friday. It saw a three-year high with the benchmark 10-year note. This was because the market was battling high inflation and the Federal Reserve could provoke a recession by aggressively tightening the policy.
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The ten-year Treasury yield stood at 2.492% after rising above 2.50% for the first time since May 2019.
The equity market is pricing in a higher rate environment, said Keith Buchanan, portfolio manager at Global Investments in Atlanta.
This, he said, is helping bank stocks outperform, while putting more pressure on “riskier elements of the market” such as growth stocks.
The Dow Jones Industrial Average rose 153.3 points, or 0.44%, to 34,861.24, the S&P 500 rose 22.9 points, or 0.51%, to 4,543.06 and the Nasdaq Composite fell 22.54 points, or 0.16%, to 14,169.30.
Shares of growth companies such as Nvidia Corp (NVDA.O) were sluggish after seeing a Wall Street rebound earlier this week.
The utilities sector also rose sharply to a record high as investors invested in stocks defensive with the Russo-Ukraine war.
The sector closed up 1.5% for the day and 3.5% for the week. While the energy sector closed the day up 2.3% and jumped more than 7% for the week following a sharp rise in oil prices.
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Volume on US exchanges stood at 11.92 billion shares, compared to an average of 14.28 billion shares for the full session over the past 20 trading days.
On Friday, 57 stocks of the S&P 500 saw new 52-week highs and 5 new lows, while 73 stocks made new highs and 79 new lows in the Nasdaq Composite.
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