Wall Street ended a volatile week with a muted Friday session: the S&P 500 rose 12.74 points, about 0.2%, to 7,650.50, the Nasdaq gained 0.4% to 26,522.55, and the Dow slipped 0.2% to 51,682.64. Tech stocks did the lifting while the rest of the market sagged, and the split told the story of a week that started with a rate hike and ended with investors deciding which assets can survive higher yields.
The Dow has now fallen for three straight weeks. The Nasdaq composite eked out a small weekly gain, which makes the divergence stark: the same market that punished everything on Wednesday’s Fed hike rewarded the AI trade by Friday. Investors rotated back into large technology names, a move that one WSJ headline described as snapping the market out of its inflation gloom, and the S&P 500 and Nasdaq had posted their biggest one-day gains in six weeks on Thursday.
Yields keep pressing
The 10-year Treasury yield climbed to 5.00% on Friday, topping 5% earlier in the week for the first time since 2023. The 2-year yield moved to its highest level in two years as traders priced in more Fed hikes after Wednesday’s quarter-point increase to 3.75-4.00%, the first since 2023. The official daily curve showed the long bond at 5.38%, and the 30-year has been hovering above 5.2% all week.
Higher yields cut both ways for equities. They raise the discount rate on future earnings, which is why the majority of stocks fell even as the indexes scraped out gains. But they also reflect an economy strong enough for the Fed to tighten into, and the technology earnings that investors leaned back into on Thursday and Friday have so far justified their multiples better than the rest of the market has. The bond market, not the stock market, has been setting the agenda all month: every leg higher in yields has pulled equity multiples down and forced investors to pay up for quality.
Oil gives a little back
Crude eased as the week closed. WTI fell below $100 a barrel on Friday and October futures settled at $95.47, down 1.8%, while Brent briefly dropped below $102 before pulling back above $103. The retreat tracked expectations that Saudi Arabia’s East-West pipeline outage will be less disruptive than feared. Middle East oil flows remain surprisingly strong despite the disruption to Saudi Arabia’s East-West pipeline, JPMorgan’s head of global commodities strategy Natasha Kaneva wrote in a Friday note.
That is the constructive read. The cautious one came from RBC’s Helima Croft, who argues the threats to crude and product supplies remain significant even with the current calm. Oil has been the main inflation risk of the autumn: the Fed’s September hike was itself justified partly by energy-driven price pressure, and every dollar of crude matters for how many more hikes the market prices in. Brent spent most of the past two weeks above $107 before this week’s cooling, and energy stocks have been one of the few consistent winners of the period. A larger-than-expected build in US crude inventories also helped calm the market, along with reports of additional Saudi supply heading to Asian buyers.
The week in review
Wednesday brought the Fed’s 25-basis-point increase and a signal that another could follow, which knocked equities hard and pushed the 10-year past 5%. Thursday delivered the rebound, led by technology, after investors concluded the hike was priced in and the AI earnings story remained intact. Friday was a consolidation day with a tech tilt and thin volume heading into the weekend. Through it all the dollar strengthened, the yen slid toward 157 after the Bank of Japan’s underwhelming hike to 1.25%, and gold held near $4,416 an ounce, up 0.4% on the day as buyers looked past the hawkish Fed toward debt risks and central-bank demand. UBS, for its part, published a forecast this week calling for gold at $5,400 by September 2027 despite the rate environment.
The small caps did not join the party. The Russell 2000 fell 0.5% on Friday to 2,860.40, a reminder that rate-sensitive borrowers benefit least from a hawkish Fed. Regional banks, homebuilders and any business living on floating-rate debt all had a week to forget. The VIX fell 4% to 14.81, so the fear gauge says the market considers the week’s storm passed, even if the yield curve says the tightening cycle is not over.
The week also carried corporate news of its own. Warren Buffett, 96, stepped down as Berkshire Hathaway chairman on Friday, handing the role to his son Howard after 56 years at the top of the board, and the stock barely moved, a sign the transition had long been priced. SpaceX shares tumbled despite an earnings beat, and the iPhone 18 Pro’s launch with the first 2nm phone chip kept the hardware cycle in the headlines. Overseas, Australian miners and banks dragged the ASX 200 to its lowest close since June earlier in the week, a small but telling echo of the same rate story playing out globally.
Next week brings US PMI data and a series of central bank decisions, with markets watching whether other central banks follow the Fed’s lead or hold back as growth slows. For now the trade is narrow: own the tech names with pricing power, avoid anything that refinances at today’s yields, and wait for the inflation data to say whether 5% on the 10-year is a ceiling or a floor.