Home Market News Nasdaq, S&P, Dow rebound from bruising post-Fed sell-off, set to end week on positive note

Nasdaq, S&P, Dow rebound from bruising post-Fed sell-off, set to end week on positive note

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Nasdaq, S&P, Dow rebound from bruising post-Fed sell-off, set to end week on positive note
Wall street district in New York City with USA flags in the background

FilippoBacci

U.S. stocks experienced a bounce back on Friday, as Wall Street aimed to end a turbulent week on a positive note following a sell-off triggered by the Federal Reserve’s announcement of prolonged higher interest rates.

The tech-heavy Nasdaq Composite (COMP.IND) led the way, rising 0.91% to 13,344.21 points in morning trade. Meanwhile, the benchmark S&P 500 (SP500) was up 0.58% at 4,355.20 points, and the blue-chip Dow (DJI) rose 0.21% to 34,142.12 points.

Technology stocks, which had been under significant pressure recently, made a comeback. Apple (AAPL) gained over 1% as the latest iPhone models hit the market, while Amazon (AMZN) rose around 2% after announcing plans to introduce limited advertising on Prime Video in the near future.

Another notable stock was Activision Blizzard (ATVI), with its shares increasing approximately 2% following preliminary approval from the UK for Microsoft’s (MSFT) proposed $69 billion takeover of the video game publisher.

Ford (F) also made headlines as its stock gained significant traction on the S&P 500 (SP500) after positive progress was reported in negotiations between the automaker and the United Auto Workers. In contrast, the union called for strikes at 38 General Motors (GM) and Stellantis (STLA) locations.

Across the 11 S&P sectors, all showed positive performance except for Financials, with Technology leading the gainers.

For the week, the benchmark S&P 500 (SP500) was on track to deliver its worst performance since early August, down 2.14%. The Nasdaq Composite (COMP.IND) was down 2.66%, and the Dow Jones Industrial Average (DJI) was down 1.38%.

Investor confidence was initially shaken following the Fed’s updated dot plot, which indicated one more rate hike this year and fewer rate cuts in 2024. Federal Reserve Chair Jerome Powell’s statement that a soft landing is not expected further added to the selling pressure. On Thursday, all three major indices fell over 1%, with the Nasdaq Composite (COMP.IND) experiencing losses of nearly 2%.

The Fed’s actions also influenced Treasury yields, with the 2-year yield (US2Y) hitting its highest level since 2006 on Wednesday, and the 10-year yield (US10Y) surpassing 4.5% on Thursday. However, yields were calmer on Friday, with the former down 5 basis points to 4.43% and the latter also down 5 basis points to 5.10%.

Check out the Seeking Alpha bond page for live updates on Treasury yields.

“Markets witnessed another substantial sell-off yesterday, with longer-dated yields reaching new highs across several countries. In fact, the U.S. 10-year Treasury yield exceeded 4.5% in overnight trading for the first time since 2007,” said Jim Reid of Deutsche Bank.

“This movement is primarily driven by expectations of central banks keeping policy rates at restrictive levels for an extended period. The initial trigger was the Fed’s hawkish dot plot on Wednesday. The sell-off further gained momentum yesterday due to the lowest U.S. weekly jobless claims since January, which suggests sustained strength rather than being a temporary blip,” Reid added.

On Friday, traders had economic data and Fed speakers’ comments to digest. S&P Global’s U.S. PMI composite flash reading for September reached a seven-month low. Boston Fed President Susan Collins also stated in prepared remarks that further interest rate hikes were still a possibility.

In terms of individual movers, U.S.-listed shares of Alibaba (BABA) rose following reports that the Chinese tech giant’s logistics unit, Cainiao, plans to file for an initial public offering in Hong Kong next week.

In general, U.S.-listed Chinese stocks showed strength as the U.S. and China established economic and financial working groups to improve communication between the two largest economies in the world.

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