Oil Prices Fall, Bond Yields Rise: US Stock Market Sees Mixed Results

A drop in oil prices helped steady the US stock market on Friday, but rising bond yields continued to put pressure on investors. The S&P 500 added 0.3% after a three-day losing streak marked by big swings caused by increasing bond yields. However, it remains near its all-time high set last month and is on track to finish its first winning week in the last three.

The Dow Jones Industrial Average was up 221 points, or 0.4%, as of 11:30 a.m. Eastern time, while the Nasdaq composite was 0.3% higher. The decline in oil prices, which had been yo-yoing due to uncertainty about when the war with Iran would allow oil to flow freely again from the Middle East, initially boosted stock indexes.

However, a report on US consumer sentiment released shortly after trading began undercut this support by pushing Treasury yields higher. The University of Michigan's survey found that consumers are bracing for inflation of 4.6% in the coming year, up from their previous forecast of 4%. This increase in expected inflation has raised concerns about a vicious cycle where rising prices encourage behavior that leads to even higher costs.

Rising yields have been a major concern for financial markets worldwide, with the 10-year Treasury yield reaching its highest level since 2007. High yields slow down the economy by making borrowing more expensive and undercutting stock prices. The artificial-intelligence industry, which had soared in earlier years due to the frenzy around technology, was particularly affected, with Nvidia reversing an early gain and dipping 0.1% after the 10-year Treasury yield rose.