Energy was high on the New York Stock Exchange trading floors, with stocks rising significantly on Friday, signaling a solid recovery from the sharp declines earlier in the week. By week's end, major indexes had nearly recovered their losses, signaling a reversal in the market's dynamic trend.
The S&P 500 Index rose 0.47% to close at 5,344.16, while the Nasdaq Composite rose 0.51% to close the day at 16,745.30. The Dow Jones Industrial Average also rose, gaining 51 points or 0.13% to close at 39,497.54.
Overall, the broad market index posted a marginal weekly decline of 0.04%. Despite a brief jump into positive territory on Friday morning, it retraced its steps slightly later in the day. For the week, the Dow and Nasdaq reported declines of 0.6% and 0.18%, respectively.
This week has been marked as the most tumultuous of 2024, with the Dow falling 1,000 points on Monday and the S&P 500 falling 3% in its worst performance since 2022. Driving the slide were last week’s weaker-than-expected U.S. payrolls data, delays in Federal Reserve rate cuts and the unwinding of a major hedge fund’s bet on the Japanese yen.
In a notable reversal, major stock indexes rallied, with the S&P 500 rising 2.3% on Thursday, marking its biggest gain since November 2022. The Dow rose about 683 points and the Nasdaq Composite rose nearly 2.9%.
Earlier in the week, the S&P 500 was down nearly 10% from its recent peak, and the Nasdaq had entered a correction, falling more than 10%. The Cboe Volatility Index, which measures market fear, has hit levels seen during the initial Covid-19 outbreak and the 2008 financial crisis.
However, investors were quick to capitalize on the downturn, buoyed by the belief that neither a new crisis nor a recession was imminent. The previous week’s losses were largely attributed to hedge funds unwinding positions in a long-standing bet on a weaker Japanese yen rather than underlying economic weaknesses.
Despite the week’s early turmoil, the 10-year Treasury yield wobbled, falling below 3.70% before rebounding to 4% on Thursday and settling around 3.94% on Friday.
Jay Hatfield, CEO of Infrastructure Capital Advisors, commented on the week’s volatility, attributing much of the sell-off to hedge fund activity rather than changes in long-term investor sentiment. He noted, “This type of market behavior is typical of late summer, characterized by thin trading and choppy hedge fund moves. It doesn’t necessarily signal a deterioration in the economy.”
Hatfield’s insights underscore the view that despite the week’s volatility, market fundamentals remain unchanged, suggesting some resilience in the face of short-term fluctuations.
