NEW YORK — A cooldown in oil prices on Friday helped release some of the pressure that’s built up on Wall Street, and U.S. stocks closed out their first winning week in the last three.
The S&P 500 added 0.5 per cent to break a three-day losing streak marked by big swings due to rising yields in the bond market. Despite the week’s uneasiness, the main measure of the U.S. stock market’s health pulled back within 0.7 per cent of its all-time high set last month.
The Dow Jones Industrial Average added 478 points, or 0.9 per cent, and the Nasdaq composite climbed 0.5 per cent.
Stocks got a boost after the price for a barrel of Brent oil dropped 2.8 per cent to US$97.44 per barrel. It’s been yo-yoing on uncertainty about when the war with Iran will allow oil to flow freely again from the Middle East. Prices go down when hopes rise for a possible deal to fully reopen the Strait of Hormuz to oil tankers, and they go up when doubts resurface.
But trading was shaky again on Wall Street Friday, particularly after a report on U.S. consumer sentiment sent Treasury yields higher in the morning.
The report from the University of Michigan said U.S. consumers are bracing for inflation of 4.6 per cent in the coming year, up from their forecast of 4 per cent the month before. It also said that overall sentiment among consumers was not as bad as economists expected, even if it was the lowest in four months.
The rising expectations for high inflation are potentially dangerous for the economy because they could encourage behavior that leads to a vicious cycle that makes the cost of living spiral even higher.
Some consumers told the survey that buying some kinds of products now would help them avoid higher prices in the future. If many rush to make such purchases at the same time, it could encourage sellers to raise prices further.
Following the report on consumer sentiment, the yield on the 10-year Treasury briefly jumped to 5.22 per cent, up from 5.18 per cent late Thursday, and was near its highest level since 2007.
High yields slow the economy by making it more expensive for everyone to borrow money, while undercutting prices for stocks and other investments. The 10-year yield has been jumping since the start of the war with Iran, when it was at 3.97 per cent.
Higher yields worldwide are rattling all kinds of financial markets. They’re on the rise because of worries about inflation, expensive oil, big government debt loads, signs of continued economic strength and other factors.
But yields eased later in trading on Friday as the price of oil pulled lower, and the 10-year yield fell back to 5.15 per cent. That helped stocks on Wall Street regain strength.
Helping to drive the market higher was Akamai Technologies. The cloud company’s stock rose 3.2 per cent after it announced an US$11.6 billion, multiyear agreement with Anthropic, the company behind the Claude AI chatbot.
Costco Wholesale climbed 2.9 per cent after the retailer reported a stronger profit for the latest quarter than analysts expected. Such strong profit reports from U.S. companies have helped the stock market remain resilient despite all the worries about high inflation and oil prices.
All told, the S&P 500 rose 39.28 points to 7,743.41. The Dow Jones Industrial Average jumped 478.64 to 51,828.62, and the Nasdaq composite gained 129.34 to 27,068.72.
In stock markets abroad, indexes were mixed in Europe following bigger moves in Asia. Japan’s Nikkei 225 climbed 1.3 per cent, while Hong Kong’s Hang Seng dropped 1 per cent.
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Stan Choe, The Associated Press
AP Business Writers Chan Ho-him and Michelle Chapman contributed to this report.
