Stocks ended lower on Friday as traders took profits following a strong rally in the tech sector. Despite the downturn, all three major indexes experienced gains over the week. The S&P 500 and Nasdaq Composite recorded their seventh consecutive weekly victories, while the Dow Jones Industrial Average extended its winning streak to three weeks.
The equity market faced additional pressure from rising Treasury yields as the weekend approached. The yield on the 2-year Treasury surged by 8.7 basis points to reach 4.079%, while the 10-year Treasury yield climbed by 14.2 basis points to 4.601%. This marks the highest levels for both benchmarks in nearly a year.
José Torres, a senior economist at Interactive Brokers, commented on the market’s conditions, stating, “A bear-steepening yield surge is igniting turbulence on Wall Street as investors lift inflation expectations amid price pressure readings from around the world that are way too hot.” He also noted the ongoing geopolitical tensions in the Strait of Hormuz and the implications for oil prices, which have remained above $100, creating additional strain on fixed-income markets.
Investor sentiment took a hit as hopes for progress following a recent meeting between President Donald Trump and Chinese President Xi Jinping faded. Torres indicated that traders are now less optimistic about potential interest rate cuts, with the CME Group FedWatch showing futures traders have largely abandoned expectations for cuts in 2026 and are now anticipating a potential quarter-point rate hike by the end of the year.
In the stock market, the S&P 500 declined by 1.2% to close at 7,408, the Nasdaq fell 1.5% to finish at 26,225, and the Dow dropped 1.1%, settling at 49,526. This decline was largely attributed to profit-taking in several of the week’s top-performing tech stocks. Major players like Intel, Advanced Micro Devices, and Micron Technology saw drops of 6.2%, 5.7%, and 6.6%, respectively. Cerebras, an artificial intelligence chipmaker that had surged following its IPO, faced a 10.1% decline. Nvidia also ended lower, falling 4.4% ahead of its earnings report.
Matt Britzman, a senior equity analyst at Hargreaves Lansdown, expressed caution for Nvidia as expectations have escalated ahead of its earnings announcement. He emphasized that while consensus estimates are high, “the market will likely be looking for more than just a clean beat.” Investors are particularly interested in the Vera Rubin roadmap amid rumors of possible delays.
Contrasting with the bearish trend, Microsoft bucked the downward movement, rising 3.1%. This increase followed news that hedge fund manager Bill Ackman announced a stake in the tech giant through Pershing Square. Ackman disclosed that the fund began accumulating its position in February and expressed confidence in Microsoft’s valuation and the strength of its offerings, such as the Microsoft 365 subscription suite and its investment in OpenAI. Despite its prior struggles, Ackman believes Wall Street is undervaluing the company’s resilience.
Overall, the market remains cautious amid rising yields and geopolitical tensions, while tech stock valuations draw mixed reactions from investors heading into the upcoming week.
