US equities fell Friday as higher Treasury yields weighed on stocks, unwinding most of Thursday's gains from rate hikes. The NASDAQ Composite fell 0.1%, the S&P 500 Index fell 0.2%, and the Dow Jones Industrial Average fell 0.4%.
This followed the rise in US government bond yields along the curve. The two-year Treasury yield increased 1.5% to 4.75%, its highest level since June 2024. The 10-year Treasury yield moved above 5.00%.
Equities fell after the Federal Reserve raised rates by 25 basis points on Wednesday. Japan also raised rates by 25 basis points overnight, reflecting a global rate-hiking trend.
Higher yields on bonds might make equities relatively less attractive and increase borrowing costs for companies. This effect is especially noticeable in materials and utilities because of their high debt levels. Financial and real estate stocks also faced pressure.
The stock market remains influenced by the artificial intelligence rally and heavy capital expenditure by hyperscalers, which also contributed to increased bond issuance.
Friday also marked the third Friday of September, known as a triple witching day. Stock options, stock index futures contracts, and stock index options all expire by the close.
Such sessions can bring higher trading volumes and increased volatility as investors close or adjust options positions. The final trading hour, between 15:00 and 16:00 EST, can become one of the most volatile periods of the quarter. Triple witching sessions often record double the average volume.
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The S&P 500 opened sharply higher before falling to the June 2 high of 7,621. The 50-day Simple Moving Average also appeared to hold during the morning session.
According to FXStreet’s technical analysis, a sustained break below 7,621 could lead the index towards Wednesday’s low near 7,508. A move higher could bring resistance at 7,800 into focus sometime next week or before the end of September.
Warren Buffett also stepped down as Berkshire Hathaway chairman after 61 years, with his son Howard Buffett replacing him. Greg Abel continues as CEO.
Traders will be watching key economic indicators and business developments before making further investment decisions.