Market snapshot: Stocks Rebound, Nearly Offset Weekly Losses
Relief from recession fears led to a collective surge in U.S. stocks, excluding small caps, marking an end to the most turbulent week of the year as the VIX index turned negative within the week. The S&P 500 briefly erased its weekly losses, with the semiconductor index rising over 2% for the week. NVIDIA was the only stock to fall among the 'Magnificent 7' on Friday, dropping 2.3% for the week. U.S. Treasury yields recovered from their decline following disappointing non-farm payroll data. Oil prices rose for four consecutive days, up approximately 4% for the week. The Japanese yen recorded its first weekly decline in six weeks, while gold posted its deepest weekly loss in two months.
The three major U.S. stock indices posted modest gains, nearly erasing their weekly declines. This week was marked as the most volatile of the year, with the Dow falling 1,000 points on Monday, the S&P 500 dropping 3%, its largest single-day decline since 2022, and the Nasdaq and small-cap index declining about 6%. The "fear index" VIX fell over 14% on Friday, nearing 20, turning negative for the week.
After a weak opening, the three major U.S. stock indices reversed course and closed at their intraday highs. The S&P 500 rose 0.47% to 5,344.16, ending the week down 0.04%. The Dow gained 0.13% or 51 points to 39,497.54, down 0.6% for the week. The Nasdaq climbed 0.51% to 16,745.3, down 0.18% for the week. The Nasdaq 100 rose 0.54%, up 0.39% for the week. The VIX index fell 14.33%, closing at 20.38, down 3.01% for the week after peaking at 65.73 on Monday.
At its intraday high, the tech-heavy Nasdaq surged nearly 0.78%; the S&P 500 briefly rose over 0.7%, completely erasing its weekly losses; the Dow, closely tied to the economic cycle, rose nearly 0.5% or 182 points; while the Russell 2000 small-cap index maintained its downward trend, falling more than 0.7% at its lowest. The semiconductor index initially fell over 1.8% but eventually closed down 0.43%, up 2.21% for the week.
Expectations for interest rate cuts continued to fall from their levels on Monday, with economists believing it highly unlikely for the Federal Reserve to cut rates between meetings. A Bloomberg survey showed that nearly three-quarters of economists expect the Fed to only cut rates by 25 basis points at its September 17-18 meeting, contrary to the calls for a significant cut by major Wall Street banks, with the remainder predicting a larger cut. The median forecast suggests only a 10% chance of an emergency rate adjustment before the September meeting.
Investors are now awaiting the release of inflation data from the U.S. and the UK next week, including U.S. July CPI consumer inflation and retail sales figures.

As concerns about a U.S. recession ease and expectations for rate cuts recede, the yield on the 10-year U.S. Treasury note rose more than 15 basis points this week, recovering all of its decline since last Friday.
In the bond market, the yield on the two-year U.S. Treasury note, more sensitive to monetary policy, rose 1.51 basis points to 4.0531%, up 17.12 basis points for the week after hitting a low of 3.6498% on Monday. The benchmark 10-year Treasury yield fell 4.60 basis points, ending a three-day streak of gains at 3.9417%, but was up 15.32 basis points for the week after dipping to 3.6653% on Monday, a new low for over a year.
The U.S. Dollar Index hovered near its weekly highs and posted a slight weekly decline. The Japanese yen ended a three-day losing streak against the dollar on Friday, rising slightly, but posted a small weekly decline, marking its first weekly loss in six weeks. The offshore yuan briefly rose 210 points or 0.3%, breaking through 7.17 yuan, down 0.2% for the week:
Bitcoin mostly rose on Friday. The largest cryptocurrency by market value, Bitcoin, surged 2.35% to $61,100.00, down 2.46% for the week. Ethereum, the second-largest, gained 0.48%, closing at $2,600.00, down 14.06% for the week.