A week that began with the Federal Reserve's first rate increase in three years ended with a split market picture: modest gains for large technology stocks, losses for the Dow, and a continued climb in bond yields, gold, and the dollar.
The S&P 500 added 0.17 percent on Friday to close at 7,650.50, and the Nasdaq Composite rose 0.39 percent to 26,522.54, with strength concentrated in large technology and so-called Magnificent Seven names. The Dow Jones Industrial Average fell 0.18 percent on the day and lost 1.69 percent over the full week, closing at 51,682.64, dragged down by weaker performance in real estate and smaller-cap shares. Healthcare stocks were a notable bright spot for the week, holding up better than most other sectors.
The ten-year Treasury yield touched 4.998 percent, just shy of the psychologically significant 5 percent level, as investors continued to digest the Fed's rate increase and the prospect of at least one more hike this year. The dollar index closed at 100.215, essentially flat on the day but up 1.1 percent over the week, as the Fed's move and a weaker euro and yen both supported the greenback. Gold rose 0.77 percent to $4,380.01 an ounce and silver gained 1.41 percent to $66.35, both continuing a run higher this year as investors sought havens amid elevated geopolitical and inflation risk.
European markets moved in the opposite direction, with the Euro Stoxx 50 dropping 1.37 percent for the week, Germany's DAX falling 1.60 percent, and France's CAC 40 down 1.49 percent, partly reflecting a widening in French government bond spreads. Asian markets were comparatively firmer over the week. The coming days bring a busy economic calendar, including China's loan prime rate decisions, minutes from Brazil's central bank, flash purchasing managers' index readings across major economies, and a policy decision from Mexico's central bank.
Investors will watch whether the ten-year Treasury yield breaks decisively above 5 percent and how China's loan prime rate and this week's flash PMI data shape the global growth picture.
Why are Treasury yields rising?
Yields have climbed alongside the Federal Reserve's rate increase and expectations of at least one more hike this year, along with inflation concerns tied to higher oil prices.
Why is gold near record levels?
Investors have continued moving into gold as a haven amid elevated inflation, geopolitical tension, and higher bond yields this year.