Markets closed higher on Friday after bond yields rebounded. The three major benchmarks ended in the positive territory. For the week, however, the benchmarks ended in the red.
The Dow Jones Industrial Average increased 1.2%, to close at 25,886.01. The S&P 500 increased 1.4% to close at 2,888.68. The tech-laden Nasdaq Composite Index closed at 7,895.99, gaining 1.7%. The fear-gauge CBOE Volatility Index (VIX) decreased 17.4% to close at 17.50. Advancers outnumbered decliners on the NYSE by a 4.87-to-1 ratio. On Nasdaq, a 4.32-to-1 ratio favored advancing issues.
How Did the Benchmarks Perform?
The Dow amassed 306.6 points to close in the green. Shares of Apple (AAPL - Free Report) and 3M (MMM - Free Report) gained 2.4% and 3%, respectively and supported gains for the 30-stock index. Both the stocks carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 rose 41.1 points to end in positive territory. All of the 11 major sectors of the S&P 500 ended in the green, with financial and industrial stocks leading the advancers. The Financial Select Sector SPDR Fund (XLF) and Industrial Select Sector SPDR Fund (XLI) increased 1.8% and 1.9%, respectively on Friday.
Bank stocks rallied on Friday due to a rise in bond yields. Shares of Bank of America (BAC - Free Report) and Citigroup (C - Free Report) rose 3% and 3.5% following such developments and boosted the overall financial sector.
Meanwhile, the Nasdaq gained 129.4 points to also close in the green. Shares of NVIDIA Corporation (NVDA - Free Report) jumped 7.3% and supported gains for the Nasdaq. Moreover, President Donald Trump on Aug 15, stated that he expects the trade war between the United States and China to be short and the next round of negotiations between the two countries in September would go on smoothly despite the latest tiff between both the parties.
On the economic data front, the U.S. housing starts fell 4% to 1,191,000 in July. Meanwhile, the building permits for the month increased 8.4% to 1.3 million units.
For the week, the Dow, the S&P 500 and the Nasdaq lost 1.5%, 1% and 0.7%. the three major indexes suffered their third weekly loss. United States Trade Representative’s (USTR) office decided to delay new tariffs on Chinese goods from Sep 1 to Dec 15. Moreover, the USTR also decided to exclude certain product categories from tariffs.
China’s comments of taking retaliatory measures against Trump’s tariffs threat dented the investor sentiment. The yield on 10-year government bond fell below the 2-year government bond, triggering investor’s concern of an impending recession. Investors opted for safe-haven government bonds to a large extent resulting in significant decline in sovereign bond yields.
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