Stocks fell Friday, pressured by a spike in oil prices and rising inflation expectations, as Wall Street wraps up a volatile week.
The S&P 500 declined by 0.50%, ending at 4,327.78. The tech-heavy Nasdaq Composite lost 1.23%, landing at 13,407.23. The Dow Jones Industrial Average was the outlier, rising by 0.12%, or 39.15 points, to close at 33,670.29.
On a weekly basis, the S&P 500 and Dow notched gains. The S&P 500 climbed 0.45% to mark its second positive week, while the Dow advanced 0.79%. The Nasdaq was down 0.18%.
Stocks came off their session highs after consumer sentiment data was released earlier Friday. According to the University of Michigan's closely watched survey, preliminary consumer sentiment data slumped in October while inflation expectations spiked.
The S&P 500 hit its low of Friday's trading session as oil prices spiked on fears that the Israel-Hamas war could escalate geopolitical tensions in the Middle East. U.S. West Texas Intermediate crude futures and international benchmark Brent crude futures each settled more than 5% higher, posting their best day since April 3.
Gold futures, which settled higher by 3.11%, had their best day of the year, dating back to Dec. 1, 2022.
Investors also kept an eye on Treasury yields. The yield on the 10-year Treasury was down by roughly 9 basis points at 4.62%. The 2-year Treasury yield was about 1 basis point lower at 5.05%. Yields and prices have an inverted relationship.
"Rates are still in the driver's seat, and that's really the rebound that we're seeing since last Friday," said Adam Turnquist, chief technical strategist at LPL Financial. "There's early signs that we're seeing technically here of a capitulation, but ... we're still fighting against an uptrend in longer-duration yields."
Unless the yield on the 10-year Treasury retreats to near 4.35%, Turnquist said he sees a "challenging and maybe choppy market as we look ahead for October."
Investors remain slightly cautious about equities, but are optimistic that stocks could rally in the fourth quarter if yields climb back down and rates move lower.
"Bonds are now offering strong competition for stocks given where yields are. So our current view is neutral on on equities," said Jeff Buchbinder, LPL's chief equity strategist. "If yields stabilize, as we expect, we think that's still a pretty good environment for stocks." The risk that rates will increase sharply hinge on a reacceleration of inflation, he said, which his firm views as unlikely.
A slew of largely positive reports from major financial firms on Friday had kicked off the third-quarter earnings season. Shares of JPMorgan Chase added 1.5% and Wells Fargo rose just above 3%, while Citigroup ended the day 0.2% lower. BlackRock's shares fell 1.3%.
UnitedHealth Group, which has the highest price per share of any Dow stock, gained 2.6% on earnings.
