US stocks rebounded on Friday after a sharp sell-off in the previous session, although the major indexes remained on track for weekly losses as elevated Treasury yields and geopolitical tensions weighed on investor sentiment.
The Dow Jones Industrial Average rose 255 points, while the S&P 500 gained 0.37% and the Nasdaq Composite advanced 0.34%.
The gains followed Thursday’s decline, when the S&P 500 and Nasdaq Composite fell 0.9% and 1%, respectively.
The S&P 500 was down about 1.9% for the week, while the Nasdaq had declined 2.5%.
The Dow was lower by 1.8% and remained on track for a second consecutive weekly decline.
Treasury yields remain a key market concern
The rise in long-dated Treasury yields remained a central concern for investors after the 30-year Treasury yield reached its highest level since 2007 earlier in the week.
The Treasury Department had announced plans to increase its purchases of longer-term debt, initially targeting at least $4 billion in buybacks of 10-, 20- and 30-year securities.
Treasury Secretary Scott Bessent later indicated that the government could increase the size of the purchases further.
However, Treasury yields remained near recent highs.
Investors continued to assess concerns surrounding government debt, financing costs and persistent inflation pressures.
The renewed pressure in the bond market has also affected equities, as higher yields can reduce the relative attractiveness of stocks and increase borrowing costs.
Investors are now looking ahead to upcoming economic data for further indications about the Federal Reserve’s monetary policy.
The August flash estimate of the S&P Global purchasing managers’ index is due later Friday, while the personal consumption expenditures inflation report is scheduled for next week.
Geopolitical tensions keep oil prices elevated
Geopolitical developments also remained a source of uncertainty for financial markets.
The United States said it would impose tougher sanctions on Iran as tensions between Washington and Tehran continued.
The prolonged standoff has kept oil prices elevated, although crude prices edged lower on Friday.
Higher energy prices remain a concern for investors because they could add to inflationary pressures and complicate the Federal Reserve’s policy outlook.
Markets will also watch Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium next week for clues about the central bank’s interest-rate trajectory.
Despite the near-term pressure, UBS Global Wealth Management raised its year-end target for the S&P 500 to 8,100, citing expectations for stronger earnings and continued corporate profit growth.
AI and crypto stocks provide pockets of strength
Several large technology stocks moved higher in trading following Thursday’s sell-off. Alphabet gained 0.25%, while Tesla rose 0.97%.
The technology sector is also heading into an important earnings test, with Nvidia scheduled to report quarterly results next week.
Its results will be closely watched following strong performances from AI infrastructure companies and major hyperscalers.
Crypto-linked stocks also advanced as Bitcoin reached its highest level since late May after President Donald Trump called on Congress to pass a major cryptocurrency bill.
Coinbase gained 5.8%, Strategy rose 4.3%, and Robinhood advanced 5.8%.
Elsewhere, Ross Stores climbed 3.8% after raising its annual profit forecast and reporting better-than-expected second-quarter results.
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