The Dow Jones Industrial Average jumped 517.80 points on Friday, closing at 53,277.01 as healthcare stocks rallied. The gain wasn't enough to erase the week's damage: the index still slid 0.9% over five days, its second straight weekly loss, as rising Treasury yields pressured equities.
The Dow Jones Industrial Average climbed 517.80 points, or 0.98%, to close at 53,277.01 on Friday. Merck and Johnson & Johnson led the gains in healthcare stocks, as investors tried to find their footing after a sell-off driven by rising Treasury yields.
Index still posts back-to-back weekly losses
Despite Friday's bounce, the Dow slid 0.9% for the week, marking back-to-back weekly losses. The S&P 500 fared worse, tumbling 1.4% on the week, while the Nasdaq Composite lost 2% over the same period. Both of those indexes snapped three-week winning streaks.
A Thursday pullback drove most of the weekly damage, as Treasury yields resumed their climb after the government's attempt to calm a sell-off in the Treasury market. Bonds on the long end of the curve have been under pressure as investors worry that higher oil prices will fuel inflation.
Yields keep climbing
On Friday, longer-dated yields extended their ascent. The 10-year Treasury note yield gained more than 3 basis points to 4.734%, while the 30-year Treasury bond yield advanced more than 3 basis points to 5.273%.
Leo Kelly, founder and CEO of Verdence Capital Advisors, thinks equities could see further losses, particularly a slide toward correction territory this fall, if yields keep rising and Middle East tensions persist. According to CNBC: "The market has adjusted to 4% to 5%" on the 10-year yield, Kelly said, warning that a break toward the 6% to 7% range would trigger a poor market reaction.
Fed speech looms next week
With yields higher, investors are turning to Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole Economic Policy Symposium next week for more clarity on the bond market and central bank independence.
Source: CNBC
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