Wall Street closed out a turbulent week on a positive note on Friday, September 25, as a pullback in oil prices eased some of the pressure that had built up in financial markets and investors returned to large technology stocks.
The Dow Jones Industrial Average rose 478.64 points, or 0.93 per cent, to close at 51,828.62. The S&P 500 gained 39.28 points, or 0.51 per cent, to 7,743.41, leaving it within 0.7 per cent of the all-time high it set last month. The Nasdaq Composite added 129.34 points, or 0.48 per cent, to 27,068.72. The small-cap Russell 2000 edged up 0.07 per cent to 2,837.55.
According to the Associated Press, it was the first winning week for US stocks in three weeks.
Oil provides the relief
The biggest macro driver on Friday was energy. Oil prices fell as optimism grew that the Strait of Hormuz, the narrow waterway through which a large share of the world's seaborne oil passes, could reopen to normal traffic. CNBC reported that Iran had asked the United States to return to a memorandum of understanding from June that had failed to end the Middle East conflict.
West Texas Intermediate crude futures fell 2.33 per cent to settle at $92.41 a barrel, while Brent, the international benchmark, declined 2.14 per cent to $104.32, according to CNBC.
Lower oil prices matter for stocks in several ways. They ease inflation pressure, reduce costs for consumers and businesses, and can take some of the upward pressure off bond yields, which have been the market's biggest concern.
Yields remain the elephant in the room
Even with Friday's gains, the bond market continues to cast a shadow. According to TheStreet, the yield on the 10-year Treasury note stood at about 5.23 per cent, near its highest level since 2007, while the 30-year yield was around 5.50 per cent, the highest since 2004. The Associated Press noted that yields eased after the 10-year briefly jumped near its 2007 high during the session.
Higher yields raise borrowing costs across the economy, from mortgages to corporate loans, and make bonds more attractive relative to stocks. They also reduce the present value of future earnings, which weighs most heavily on growth companies whose profits lie further in the future.
Wall Street strategists disagree about what is driving the rise in yields. Some point to stubborn inflation, others to strong economic growth, and others to the scale of US government borrowing. Whatever the cause, the prospect that high interest rates may persist has unsettled investors who fear that something in the financial system could eventually break.
"Geopolitical risk and bond market volatility continues to roil markets, although Wall Street remains remarkably resilient amidst the tumult," said Kyle Rodda of Capital.com, quoted by TheStreet. He added: "Corporate profitability is providing the floor supporting the market while geopolitical and policy uncertainty are creating a ceiling."
Big Tech back in the lead
Technology stocks dominated the day's gains. Microsoft rose about 4 per cent after unveiling a revamp of its Copilot AI assistant focused on enterprise customers, including new coding and agentic tools. Oppenheimer raised its price target on the stock.
Richard Reyle of Questar Capital Partners summed up the shift in sentiment toward the market's largest companies. "The Mag 7 had been the Lag 7 all year," he said, adding that the Magnificent Seven names are "back en vogue".
