Dow Rebounds Sharply on Friday Amid Strong Services Sector

The Dow Jones Industrial Average rebounded sharply on Friday, climbing over 430 points to close above 53,200. The index had fallen by nearly 690 points on Thursday but recovered most of that loss in a session marked by a strong services sector and a weak manufacturing sector. According to the preliminary August Purchasing Managers Index (PMI), services drove growth at 56.8 against a consensus of 54, while manufacturing missed expectations at 53.2.

The rebound was not seen across all asset classes, however, with Treasury yields continuing to climb. The ten-year yield rose above 4.70% and the thirty-year above 5.25%, despite efforts by the Treasury Secretary to reassure markets that a fiscal consolidation plan is coming from the White House within days.

Healthcare stocks led the advance in the Dow, with Merck (MRK) and Johnson & Johnson (JNJ) rising on strong earnings reports. Moderna (MRNA) surged 17% after delivering further late-stage data from its personalized cancer program with Merck. Robinhood (HOOD) and Coinbase (COIN) also rose, driven by gains in Bitcoin.

The rebound in the Dow was a welcome development for investors, who had seen the index fall sharply earlier in the week on concerns about inflation and interest rates. However, the rally may be short-lived if Treasury yields continue to climb, as this could indicate that the Federal Reserve is unlikely to cut interest rates anytime soon.