On Friday morning, U.S. stocks made gains as they sought stability following a decline in the previous session, which was influenced by an unfavorable Treasury bond auction and indications that interest rates might remain elevated for an extended period.
Here's the breakdown:
In the prior session, the Dow industrials dropped around 220 points, or 0.7%, marking a second consecutive day of decline. The S&P 500 ended an eight-day winning streak, and the Nasdaq Composite halted a run of nine straight gains.
Key market drivers included the end of the longest winning streaks for the S&P 500 and Nasdaq Composite since November 2021, prompted by a poorly-received $24 billion sale of 30-year Treasury bonds.
On Friday, Treasury bond yields eased, with the yield on the 30-year Treasury bond falling by 5.1 basis points to 4.725%, down from Thursday's 4.777%. It remains unclear whether the Treasury auction was affected by a reported ransomware attack against the U.S. unit of the Industrial & Commercial Bank of China, causing disruptions in the U.S. Treasury market.
Investors reevaluated the recent debt market rally driven by expectations that the Federal Reserve's interest-rate hiking cycle was concluding. Federal Reserve Chairman Jerome Powell's comments on Thursday expressed caution about potential "head fakes" from inflation, and he emphasized that the "2% goal was not assured."
Although Powell's language mirrored remarks from November 1, the subsequent rally for stocks and bonds was deemed by some as "overdone and not governed by facts." Consumer sentiment also declined in November for the fourth consecutive month due to concerns about higher interest rates and geopolitical tensions in the Middle East.
Investors anticipated further insights from the Federal Reserve on Friday, including a speech by San Francisco Fed President Mary Daly at 1 p.m. Eastern time.
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