Stocks finished the week higher even though investors had plenty to worry about, from a bond market sell-off to oil prices that swung on Middle East headlines.
The Dow, S&P 500 and Nasdaq all notched weekly gains, with the market effectively shrugging off the bond sell-off and easing oil prices by Friday's close. Earlier in the week, the S&P 500 and Nasdaq had traded closer to flat as rising bond yields and volatile oil prices tested investor confidence, before renewed optimism around technology stocks helped lift the Nasdaq and pull the broader market higher into the weekly close.
Bond yields, which move opposite to bond prices, had climbed earlier in the week, a pattern that often reflects investor expectations for higher interest rates or inflation, and which tends to make borrowing more expensive across the economy, from mortgages to corporate debt.
Oil prices were a second source of volatility, tracking the exchange of strikes between the United States and Iran described elsewhere in today's brief. Energy markets are especially sensitive to any developments touching the Strait of Hormuz, given how much of the world's oil and gas shipments pass through that corridor, and prices eased somewhat by the end of the week even after an earlier run-up.
Taken together, the week illustrated how stock, bond and commodity markets are currently reacting to the same set of headlines, the Federal Reserve's rate decision and the Iran conflict, sometimes pulling in different directions on the same day before settling into a clearer weekly trend.
Investors will be watching whether bond yields keep climbing next week and whether oil prices stabilize, both of which will shape whether this week's gains hold.
Why did bond yields affect the stock market this week?
Rising bond yields typically signal expectations of higher interest rates or inflation, which can make borrowing costlier for companies and consumers and weigh on stock valuations.
Why do oil prices move on Iran-related headlines?
Traders watch for any risk to shipping through the Strait of Hormuz, a corridor that carries a large share of the world's oil and gas exports.