By Avinash P and Purvi Agarwal
Aug 21 (Reuters) – The main U.S. indexes were set for a recovery on Friday after a pummeling in the previous session, though markets remained on track to end the week in the red as surging government bond yields and geopolitical tensions dampened risk appetite.
The S&P 500 and the tech-heavy Nasdaq were set to snap a three-week winning streak, while the Dow was headed for a second consecutive weekly loss and its steepest weekly decline since mid-March.
A jump in long-dated U.S. Treasury yields spooked markets this week as concerns over ballooning government debt, higher financing costs and persistent inflation fears dented sentiment. The yield on the 30-year Treasury bond hit its highest level since 2007 earlier this week.
U.S. Treasury Secretary Scott Bessent said on Thursday that the government could further increase its Treasury repurchases after Wednesday’s surprise intervention.
Yields, however, remained near recent highs.
“Bond yields don’t seem to be responding to the Treasury’s purchases, largely because the bond market is massive and is pricing in a stronger economy and higher inflation,” said Paul Stanley, managing director and founding advisor, Arca.
“It is another brick in the market’s wall of worry and ultimately, the market will likely resume its focus on the promise of artificial intelligence and how companies are using this productivity to drive earnings.”
Early on Friday, most megacaps were treading higher in premarket trading. Alphabet and Tesla led gains with a 0.6% and 1.2% rise, respectively, after Thursday’s rout.
At 08:24 a.m. ET, Dow E-minis rose 312 points, or 0.59%, S&P 500 E-minis gained 35.5 points, or 0.46%, and Nasdaq 100 E-minis were up 202.75 points, or 0.69%.
In other movers, Ross Stores added 8% after the value retailer raised its annual profit forecasts and reported better-than-expected second-quarter results.
Crypto-linked companies continued to rise, with bitcoin touching its highest mark since late May after U.S. President Donald Trump called on Congress to pass a crucial crypto bill.
Exchange operator Coinbase Global gained 4.5%, bitcoin-hoarder Strategy rose 6.8% and retail-investor platform Robinhood advanced 4.8%.
Broader risk sentiment, however, remained in check as Bessent said the United States will impose “the toughest sanctions in history” on Iran, a move he suggested would lessen the need for new major military operations.
The impasse between Washington and Tehran has kept oil prices elevated, though they dipped slightly on Friday. [O/R]
UBS Global Wealth Management raised its year-end target for the S&P 500 to 8,100, pointing to a stronger earnings outlook and confidence that corporate profit growth will remain robust into next year.
A flash estimate of the S&P Global purchasing managers’ index survey for August is scheduled for release after markets open.
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Attention will now turn to next week’s Personal Consumption Expenditures, the U.S. Federal Reserve’s preferred inflation gauge, following tame inflation readings last week that knocked down bets of an imminent central bank rate hike.
Chair Kevin Warsh’s speech at the Jackson Hole symposium will also be watched for clues on the Fed’s rate-cut trajectory.
Nvidia is scheduled to report quarterly earnings next week, in the next test of the AI trade following strong earnings from some AI infrastructure companies, along with major hyperscalers.
(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)
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