US Stock Market Weekly Wrap: Dow Jones End Negative For 3rd Week, Nasdaq, S&P 500 Outperform; Key Factors Here

The US stock market recorded a mixed weekly performance, with the Dow Jones registering its third weekly decline. On the other hand, Nasdaq and the S&P 500 outperformed on Wall Street. Elevated crude oil prices and treasury yields, along with a rising dollar, impacted the equities market globally, including Wall Street. On the positive side, US and Iran are moving closer to ink an agreement for lifting blockades at the Persian Gulf routes.

US Stock Market Weekly Wrap

On September 25th, Dow Jones index gained by 478.64 points or 0.93% to close at 51,828.62, while Nasdaq Composite index rallied by 129.34 points or 0.5% to end at 27,068.72. Also, the S&P 500 index rose by 39.28 points or 0.51% to close at 7,743.41.

Top performing indexes included hardware shares, hyperscalers, and financial stocks. Applied Materials gained by over 2%, while LAM Research surged nearly 3% and Microsoft zoomed by nearly 4% after plans to merge its consumer and workplace Copilot AI assistants into a product for corporate customers. Further, Alphabet stock gained nearly 1%. On the contrary, Meta stock fell 3.3% but posted weekly gains and Oracle dropped nearly 2%.

The latest rally was also due to benchmark borrowing costs which halted their rising spree after hitting multi-decade highs. Still, the 10 year US treasury yield stood around 5.2%, which is highest level since mid-2007.

Traders refocused on hawkish comments from Fed officials, while a lack of concrete progress in US-Iran negotiations to end the conflict continued to fuel concerns about inflation. Meanwhile, the University of Michigan's consumer sentiment survey confirmed a sharp rise in inflation expectations in September. Strong US economic data, worsening fiscal conditions and rising government debt have also weighed on the Treasury market. Adding to woes, efforts by Treasury Secretary Bessent to cap long-dated yields through increased Treasury buybacks are widely seen as having had limited impact. Investors currently expect the Fed to raise the federal funds rate by 25bps next month, with the probability of such a move standing at around 66%, as per Trading Economics data.

On the other hand, US WTI crude oil eased to $92 per barrel but Brent crude remained elevated to around $104 per barrel.

As per Charles Schwab's note hopes for Middle East progress sent oil down while meetings between U.S. and Chinese leaders failed to forge any trade breakthroughs. Consumer sentiment data arrives after the open and the earnings calendar is empty, potentially keeping geopolitics front and center.

Schwab's note added, the benchmark 10-year Treasury note yield gave back its steepest overnight gains, aiding stocks, but remains near 19-year highs. Still, major indexes have been resilient, possibly because the yield climb has been relatively orderly, inflation is just slightly high, and economic conditions haven't deteriorated. A host of data next week-including a fresh monthly jobs report-puts the economy center stage and could help set the tone, while earnings from Micron (MU) and Nike (NKE) also might stir interest.

Overall, for the trading week of September 21st to 25th, Dow Jones posted its third weekly decline but marginally down by 108.14 points. In the previous two weeks, Dow Jones have nosedived by more than 1000 points each. On the other hand, Nasdaq Composite recorded weekly gains of 938.52 points or 3.6%, outperforming its counterparts. S&P 500 also followed a positive trend with weekly upside of 50.58 points or 0.7%.

During the week, focus stood on Fed officials comments and the much-awaited US President Donald Trump and Chinese President Xi Jinping's summit. Trump called it a "great meeting" on the first day. The two leaders discussed trade opportunities while shying away from expressing opinions over issues like Taiwan independence and Iran conflict. Though both the leaders held their own diverged views on key topics like artificial intelligence.

Read more at: https://www.goodreturns.in/news/trump-xi-summit-can-us-china-avoid-the-thucydides-trap-5-key-takeaways-1537215.html

Going ahead, yield remains a challenge. From an investor's perspective, as per Schwab's note, Fed rate hikes could pull up the yields on short-term investments. The yields on Treasury bills, short-term certificates of deposit, and money market funds have a strong relationship with the fed funds rate.

When yields on these assets rise, they compete with stocks for investor cash, another potential challenge for Wall Street. Certain sectors, notably utilities and staples that offer dividends, tend to lose ground when yields rise because higher yields compete with income they offer investors, as per the note.

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