U.S. stocks closed higher on Friday following a massive sell-off in the previous session, driven by a sharp rise in bond yields, while a lack of clarity over the progress in the Middle East kept denting investors’ morale. All three major indexes ended in positive territory.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) gained 1%, or 517.80 points, to close at 53,277.01 points. The blue-chip index got a boost from Merck & Co., Inc. ( MRK), with its shares gaining 2.4%.
The S&P 500 rose 0.4%, or 33.21 points, to finish at 7,674.37 points. Materials and healthcare stocks were the biggest gainers.
The Health Care Select Sector SPDR (XLV) gained 1.3%. The Materials Select Sector SPDR (XLB) added 2.2%. Eight of the 11 sectors of the benchmark index ended in positive territory.
The tech-heavy Nasdaq advanced 0.4%, or 113.29 points, to end at 26,180.46 points.
The fear gauge, the CBOE Volatility Index (VIX), was down 5.5% to 15.13. Advancers outnumbered decliners on the NYSE by a 1.68-to-1 ratio. On the Nasdaq, a 1.85-to-1 ratio favored declining issues. A total of 14.91 billion shares were traded on Friday, lower than the last 20-session average of 16.62 billion.
On the NYSE, there were 214 new highs and 118 new lows. On the Nasdaq, there were 91 new highs and 76 new lows. On the S&P 500, there were 13 new 52-week highs and four new lows.
Higher Bond Yields Make Investors Jittery
Stocks rebounded on Friday after suffering in the earlier session following a sell-off, triggered by a rise in bond yields. Investors have remained jittery as Treasury yields continued to climb despite the government’s efforts to curb a sell-off in the bond market.
Long-term Treasuries, particularly, have come under pressure lately as investors worry that rising oil prices could push inflation higher. This has led to fears of higher borrowing costs, which have been weighing on investors’ risk appetite.
The 10-year Treasury bond yield jumped more than 3 basis points to 4.734% on Friday. The 30-year Treasury note yield also climbed more than 3 basis points to settle at 5.273%.
However, stocks gained on Friday, helped by healthcare stocks. Shares of Johnson & Johnson ( JNJ) gained 1.1%, while Eli Lilly and Company ( LLY) rose 0.9%. Johnson & Johnson carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
The financial sector also helped the broader market, with significant gains recorded by cryptocurrency stocks. Bitcoin posted a 22% weekly jump. Shares of Coinbase Global, Inc. ( COIN) jumped 8.2%.
Investors will now be looking forward to the speech from Federal Reserve Chairman Kevin Warsh at the Jackson Hole Economic Policy Symposium this week as they look to get more clarity on the central bank’s future monetary path.
No major economic data was released on Friday.
Weekly Roundup
Thursday’s losses pushed all three major indexes into the red despite a rebound in the next session. The S&P 500 ended the week 1.4% lower, while the Nasdaq was down 2% for the week. Both indexes ended their three-week winning streaks.
The Dow also ended its two-week winning streak, with the index finishing 0.9% lower for the week.
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This article originally published on Zacks Investment Research (zacks.com).