NEW YORK — A decline in oil prices on Friday alleviated some pressure on Wall Street, resulting in U.S. stocks concluding their first winning week in three weeks. The S&P 500 increased by 0.5%, halting a three-day losing streak characterized by volatility due to rising bond yields. The S&P 500 is now just 0.7% shy of its all-time high set last month.
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The Dow Jones Industrial Average rose by 478 points, or 0.9%, while the Nasdaq composite increased by 0.5%. Stocks gained momentum after Brent oil prices decreased by 2.8%, bringing the cost to $97.44 per barrel. Oil prices have fluctuated amid concerns regarding when stability in the Middle East, particularly related to the situation with Iran, would allow for more consistent oil flow. Prices tend to decrease with hopes for a resolution to reopen the Strait of Hormuz to oil tankers, while skepticism drives prices up.
Despite the stock market's gains, trading remained volatile, especially following a report on U.S. consumer sentiment that contributed to a rise in Treasury yields earlier in the day. The University of Michigan's report indicated that consumers expect inflation to be 4.6% in the coming year, an increase from the previous forecast of 4%. While overall consumer sentiment was not as bleak as some economists expected, it remains at its lowest point in four months.
The uptick in inflation expectations poses risks to the economy, potentially fueling a cycle that could exacerbate living costs. Some consumers indicated that purchasing certain items now might help them avoid higher prices later, which could encourage sellers to raise prices further.
Following the sentiment report, the yield on the 10-year Treasury briefly increased to 5.22%, up from 5.18% late Thursday, nearing its highest level since 2007. Rising yields increase borrowing costs, slowing economic growth and putting downward pressure on stock values. The 10-year yield has spiked from 3.97% since the onset of the conflict in the Middle East.
Global yields have been rising due to inflation concerns, high oil prices, significant government debt, and signs of continued economic strength. However, yields retreated later in the trading session as oil prices fell, leading the 10-year yield back to 5.15%, which aided stock recovery.
Market gains were also bolstered by Akamai Technologies, whose stock rose 3.2% following the announcement of an $11.6 billion multiyear agreement with Anthropic, creators of the Claude AI chatbot. Additionally, Costco Wholesale's stock increased by 2.9% after reporting quarterly profits that exceeded analysts' expectations. Strong earnings reports from U.S. companies have supported stock market resilience amid prevailing inflation and oil price concerns.
For the day, the S&P 500 rose by 39.28 points to 7,743.41, the Dow Jones Industrial Average increased by 478.64 to 51,828.62, and the Nasdaq composite gained 129.34 to 27,068.72. In international markets, European indexes showed mixed results, while Japan's Nikkei 225 rose by 1.3% and Hong Kong's Hang Seng fell by 1%.