The U.S. stock market opened on a positive note on Friday, with the S&P 500 index rebounding from its most significant sell-off since March. Nevertheless, both the S&P 500 and Nasdaq Composite remained poised for a third consecutive weekly decline, reflecting the ongoing impact of surging bond yields and a stronger dollar following the Federal Reserve's recent meeting.
Key Market Indicators:
Market Dynamics:In the aftermath of two days of intense selling prompted by the Federal Reserve's announcement that it anticipated maintaining its policy interest rate above 5.0% well into the coming year, U.S. equities seemed to have found some stability. However, analysts observed that the market's rebound on Friday appeared somewhat subdued following the recent stock market turmoil, the most severe since the events surrounding the collapse of Silicon Valley Bank in March.
Saxo Bank strategists commented on the ongoing fallout from the Federal Reserve's "higher for longer" message, noting that Wall Street experienced its most significant slump in six months. The yield on the benchmark 10-year Treasury note surged to 4.5%, the highest level since 2007, intensifying concerns about the prospect of future rate hikes.
Rapidly rising Treasury yields have been identified as a primary driver of the stock market's recent turbulence. Although yields slightly retreated on Friday, signaling a temporary respite in their upward trajectory, the 10-year yield remained relatively stable at 4.482% in recent trade.
The week featured a flurry of central bank decisions, concluding with the Bank of Japan maintaining its ultra-loose monetary policy stance, resulting in some dollar strength against the yen (USDJPY, +0.33%).
Economic data released on Friday highlighted weaknesses in the U.S. services sector, while manufacturing activity exhibited marginal improvement but continued to contract, as indicated by S&P U.S. purchasing managers' indexes.
Additionally, investors were set to receive insights from senior Federal Reserve officials, including Fed Gov. Lisa Cook, who was scheduled to speak at an artificial intelligence conference.
For the week, all three major U.S. equity indexes were poised to conclude with losses. Notably, the Nasdaq, which bore the brunt of this week's sell-off, was on track to post a decline of more than 3%, marking its most substantial weekly drop since the week ending March 10, according to Trade Algo
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