Benchmarks managed to close in the green on Friday despite a tumultuous week. Moreover, the CBOE Volatility Index declined but remained three times higher than last year's average. Further, all three key U.S. indexes registered their worst weekly decline in two years following increase in inflation and higher bond yields.
Markets slipped into a correction during the week, with the Dow witnessing two 1,000-point drops during the period. Both the S&P 500 and the blue-chip index registered their worst weekly fall since January 2016, while the Nasdaq posted its biggest weekly drop since February 2016.
How the Benchmarks Fared?
The Dow Jones Industrial Average (DJI) increased 1.4%, or 331.75 points, to close at 24,190.90. The S&P 500 rose 1.5% to close at 2,619.55. The tech-laden Nasdaq Composite Index closed at 6,874.49, gaining 1.4%. The fear-gauge CBOE Volatility Index (VIX) decreased 13.2% to close at 29.06. A total of around 12 billion shares were traded on Friday, higher than the last 20-session average of 8.5 billion shares. Advancers outnumbered decliners on the NYSE by a 1.43 -to-1 ratio. On Nasdaq, a 1.36-to-1 ratio favored advancing issues.
Markets Recover For The Day
All the key U.S. indexes made a recovery during the last hour of trading to end in positive territory on Friday. The movement lacked specific catalysts even as the blue-chip index registered an increase of more than 300 points. For the S&P 500 index, 10 out of 11 sectors increased over the day.
The Technology Select Sector SPDR (XLK) jumped 2.5%, becoming the best performing sector among the S&P 500. Some of its key holdings, including Alphabet Inc. GOOGL and Microsoft Corporation MSFT increased 3.8% and 3.7%, respectively.Alphabethas a Zacks Rank #3 (Hold), Microsoft holds a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Additionally, the Real Estate Select Sector SPDR (XLRE) climbed 2.4% and was the second best performer among key S&P 500 sectors. The sector's key components, including Simon Property Group, Inc. SPG and American Tower Corporation (REIT) AMT advanced 3.3% and 1.9%.
On the earnings front, shares of NVIDIA Corporation NVDA increased 6.7% after both its top and bottom line beat their respective Zacks Consensus Estimate. NVIDIA was the second best performing stock among the S&P 500. ( Read More )
Indexes Post Worst Week In 2 Years
For the week, the Dow, the S&P 500 and the Nasdaq lost 5.2%, 5.2% and 5.1%, respectively. All the key indexes reached correction territory after hitting all-time highs on Jan 26. Markets suffered huge losses during the week following concerns over attractiveness of equities over bonds.
Rising bond yields has diminished the appeal of stocks, especially with valuations hovering at historically high levels. Tighter labor market, strong wage growth and prospects of rise in inflation raised rate hike prospects as early as Fed's next policy meeting in March, which in turn weighed on investor sentiment. Higher rate environment and optimism of steady economic growth and higher inflation weighed on bond prices.
Lower bond prices supported the 10-year U.S. Treasury yield, which increased to 2.85% on Friday, after rising as high as 2.885% on Thursday, its highest levels in four years. Meanwhile, the fear-gauge bond index, Cboe/CBOT 10-year U.S. Treasury Note Volatility Index (TYVIX) rose 29% over the week.
Stocks That Made Headlines
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