(Sharecast News) - Wall Street's three benchmark equity indices dropped more than 1% each on Friday, pulling back sharply after the S&P 500 and Nasdaq hit record highs the previous session, as a surge in bond yields to a one-year high hammered investors' appetite for risk.
The yield on a 10-year US Treasury jumped 11.5 basis points to 4.604% by the close of play in New York, hitting highs not seen since last May, amid speculation that the Federal Reserve will soon have to tighten monetary policy to fight rising inflationary pressures tied to the Iran war. The rise in yield came despite US economic data coming in much stronger than expected.
The result was a sharp drop in equity prices across the board, with the Dow falling 1.1% from a three-month high and the S&P 500 and Nasdaq plunging 1.2% and 1.5% respectively.
"A sea of red greeted stock investors on the last day of the week as the oil price is on track for a weekly gain of over 5% and European gas prices hit a five-week high," said Axel Rudolph, senior technical analyst at IG.
"Heightened concerns of a prolonged shut down of the Strait of Hormuz following President Trump's blas comments on the matter also pushed the US 10-year Treasury yield to a one-year high."
Donald Trump said on Friday that he hoped that negotiations with Iran will eventually "reach a good conclusion" that will see the Strait of Hormuz fully reopened, but added that he was "not going to be much more patient" with Tehran's leaders.
Renewed optimism about AI and strong corporate earnings pushed both the S&P 500 and Nasdaq to record highs on Thursday. Chip stocks in particular drove gains on hopes that the meeting in Beijing between Donald Trump and Xi Jinping might result in some major tech deals between the US and China.
However, the lack of any major news prompted semiconductor stocks to slide on Friday, with heavyweights Nvidia, Intel, Broadcom, Micron Technology and AMD falling sharply.
Even Applied Materials fell despite reporting record quarterly revenue and issuing a stronger-than-expected outlook overnight, as demand for AI infrastructure and advanced memory chips continued to drive spending on semiconductor manufacturing equipment. The US chip equipment maker said revenue rose 11% year on year to $7.91bn in the second quarter ended 26 April, ahead of analyst expectations of about $7.67bn to $7.69bn cited by Bloomberg.
The wider tech sector was also under pressure, with heavyweights Amazon, Tesla, Meta and Alphabet in the red.
One bright spark was Microsoft, after Pershing Square's Bill Ackman revealed that he has been building a new stake in the company since February on the back its recent investments into AI, which he said weren't yet priced in by the market. In a post on X, he said the position would be disclosed in a regulatory filings later Friday.
Stemming the rise in bond yields was the news that manufacturing activity across New York State grew at its highest rate in more than four years in May, with new orders and shipments rising strongly over the month. The headline general business conditions index from the New York Fed's Empire State Manufacturing Survey rose to 19.6 from 11, smashing the 7.5 consensus forecast.
Meanwhile, national industrial production figures from the Fed showed that output grew 0.7% over the month of April after a 0.3% decline in March, ahead of the 0.3% increase expected. This was the strongest growth rate in 14 months.
Dow Jones - Risers
Microsoft Corp. (MSFT) $421.92 4.34%
Salesforce.Com Inc. (CRM) $173.51 3.54%
Chevron Corp. (CVX) $191.10 2.39%
Visa Inc. (V) $325.75 1.00%
Apple Inc. (AAPL) $300.23 0.87%
3M Co. (MMM) $146.22 0.76%
McDonald's Corp. (MCD) $276.39 0.52%
Travelers Company Inc. (TRV) $299.76 0.49%
Coca-Cola Co. (KO) $80.82 0.46%
International Business Machines Corporation (CDI) (IBM) $219.30 0.43%
Dow Jones - Fallers
Intel Corp. (INTC) $108.77 -4.83%
Boeing Co. (BA) $220.49 -3.80%
Caterpillar Inc. (CAT) $888.31 -3.43%
Amgen Inc. (AMGN) $326.31 -3.04%
Walt Disney Co. (DIS) $102.72 -2.59%
Home Depot Inc. (HD) $297.51 -2.25%
Goldman Sachs Group Inc. (GS) $948.47 -2.11%
Merck & Co. Inc. (MRK) $111.38 -1.80%
Johnson & Johnson (JNJ) $226.71 -1.77%
Verizon Communications Inc. (VZ) $46.37 -1.47%
S&P 500 - Risers
J.B. Hunt Transport Services Inc. (JBHT) $262.21 10.11%
Dxc Technology Company (DXC) $8.94 8.76%
Apache Corp. (APA) $38.98 5.84%
Occidental Petroleum Corp. (OXY) $59.62 4.89%
Devon Energy Corp. (DVN) $49.49 4.76%
Adobe Systems Inc. (ADBE) $247.60 4.62%
Intuit Inc. (INTU) $393.00 4.56%
FMC Corp. (FMC) $14.17 4.50%
Microsoft Corp. (MSFT) $421.92 4.34%
H&R Block Inc. (HRB) $37.25 4.31%
S&P 500 - Fallers
Micron Technology Inc. (MU) $724.66 -8.72%
Coterra Energy Inc. (CTRA) $32.56 -8.62%
Corning Inc. (GLW) $191.81 -7.94%
LKQ Corporation (LKQ) $24.61 -7.79%
Ford Motor Co. (F) $13.40 -7.39%
Nektar Therapeutics (NKTR) $70.62 -6.50%
Newmont Corporation (NEM) $109.06 -6.25%
Borg Warner Inc. (BWA) $63.21 -6.24%
Whirlpool Corp. (WHR) $39.99 -5.97%
Albemarle Corp. (ALB) $180.38 -5.60%
Nasdaq 100 - Risers
J.B. Hunt Transport Services Inc. (JBHT) $262.21 10.11%
Check Point Software Technologies Ltd. (CHKP) $124.03 8.14%
Workday, Inc. (WDAY) $125.01 5.87%
Adobe Systems Inc. (ADBE) $247.60 4.62%
Intuit Inc. (INTU) $393.00 4.56%
Microsoft Corp. (MSFT) $421.92 4.34%
Henry Schein Inc. (HSIC) $72.72 4.14%
eBay Inc. (EBAY) $116.13 3.43%
Autodesk Inc. (ADSK) $236.62 2.70%
Skyworks Solutions Inc. (SWKS) $68.53 2.54%
Nasdaq 100 - Fallers
Qvc Group Inc Series A (QVCGA) $0.34 -13.49%
Micron Technology Inc. (MU) $724.66 -8.72%
Vodafone Group Plc ADS (VOD) $14.68 -5.81%
Baidu Inc. (BIDU) $135.33 -5.23%
Intel Corp. (INTC) $108.77 -4.83%
Tesla Inc (TSLA) $422.24 -4.76%
DENTSPLY Sirona Inc. (XRAY) $10.07 -4.64%
Charter Communications Inc. (CHTR) $140.33 -4.51%
Asml Holdings N.V. (ASML) $1,501.81 -4.50%
American Airlines Group (AAL) $12.31 -4.38%
177.56 (1.71%)
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