The S&P 500 Index ($SPX) (SPY) closed up by +0.17% on Friday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down by -0.18%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.67%. December E-mini S&P futures (ESZ26) rose +0.20%, and December E-mini Nasdaq futures (NQZ26) rose +0.70%.
Stock indexes settled mixed on Friday, with the broader market recovering from early losses as short covering emerged after crude oil prices gave up an early advance and fell more than -1% on hopes that diplomacy could resume crude flows from the Middle East. Stock indexes also found support from strength in chipmakers and AI-infrastructure stocks, along with a rally in cryptocurrency-exposed stocks.
Higher bond yields on Friday initially weighed on stocks as the 10-year T-note yield rose +6 bp to 5.00% on expectations for the Fed to raise interest rates at least one more time this year.
Friday’s weaker-than-expected US economic news also weighed on stocks. Aug manufacturing production unexpectedly fell -0.3% m/m, weaker than expectations of +0.3% m/m and the largest decline in 10 months. Also, US Aug leading indicators unexpectedly fell -0.1%, weaker than expectations of a +0.1% increase and the first decline in 5 months.
Kansas City Fed President Jeff Schmid said, “The Fed has work to do on inflation and this week’s action was a step in that direction.” He added that “higher oil prices have been an important driver of elevated inflation, but it is important to acknowledge that our inflation problem is not just about energy.”
Bitcoin (^BTCUSD) rose more than +5% on Friday to a 2-week high after the SEC moved forward with a plan to allow digital versions of securities to start trading in the US.
Stock volatility on Friday was higher than usual due to the quarterly event known as triple witching, when equity options, futures, and derivatives expire. According to Citadel Securities, about $7 trillion of options are set to expire today, one of the largest ever. Index rebalancing may also lead to market turbulence, with Bloom Energy, Illumina, and Everpure added to the S&P 500 after the close, while SpaceX will get a weighting boost from a Nasdaq 100 rebalance.
Oct WTI crude oil prices (CLV26) fell more than -1% on Friday in hopes that diplomacy can end hostilities in the Middle East and resume crude flows from the region. Reuters reported that China privately asked Iran to help rein in Houthi militants in Yemen. The militants have attacked energy facilities in Saudi Arabia and advanced toward the Bab-el-Mandeb strait, the chokepoint at the southern end of the Red Sea.
Some crude supplies from the Middle East are getting through, easing supply concerns. On Wednesday, US Energy Secretary Wright said 18 million bbl of crude oil and refined products went through the Strait of Hormuz on Tuesday, easing global supply concerns.
Also, Saudi Arabia said it seeks to return about half the capacity of the East-West pipeline within days following a shutdown last week because of drone strikes. The East-West pipeline, which carries 7 million bpd of crude, was closed late last week after threats from Houthi rebels. The pipeline moves oil away from the Persian Gulf toward the Red Sea, where it can be loaded on tankers. Saudi Arabia told OPEC last Thursday that its crude production in August fell to 6.238 million bpd, the lowest since 1990.
Markets are discounting a 55% chance of a +25 bp Fed rate hike at the next FOMC meeting on October 27-28.
Overseas stock markets settled mixed on Friday. The Euro Stoxx 50 closed down -1.37%. China’s Shanghai Composite rose to a 1-week high and closed up +0.94%. Japan’s Nikkei-225 Stock Average climbed to a 1-week high and closed up +1.38%.
Interest Rates
December 10-year T-notes (ZNZ6) closed down by -11 ticks on Friday. The 10-year T-note yield rose +6.6 bp to 4.996%. T-notes were under pressure Friday on negative carryover from Wednesday, when the Fed raised interest rates by 25 bp and signaled another rate hike later this year. Also, hawkish comments from Kansas City Fed President Jeff Schmid weighed on T-notes when he said, “The Fed has work to do on inflation,” signaling he favors additional Fed rate hikes.
T-notes recovered from their worst level after WTI crude oil prices fell more than -1%, lowering inflation expectations. Also, Friday’s weaker-than-expected US economic news on Aug manufacturing production and Aug leading indicators supported T-notes.
European government bond yields moved higher on Friday. The 10-year German bund yield rose +4.3 bp to 3.519%. The 10-year UK gilt rose +7.3 bp to 5.295%.
The ECB Aug 1-year CPI expectations rose to +3.0% from +2.9% in July, weaker than expectations of +3.1%. The Aug 3-year CPI expectations rose to +2.9% from +2.7% in July, stronger than expectations of +2.8%.
German Aug PPI rose +1.1% m/m and +4.6% y/y, stronger than expectations of +0.6% m/m and +3.9% y/y, with the +4.6% y/y increase the largest in 3.25 years.
ECB President Christine Lagarde said economic growth in the Eurozone is a bit more promising than we thought, and we’re not seeing second-round effects on inflation yet.
UK Aug retail sales ex-auto fuel unexpectedly rose +0.6% m/m, stronger than expectations of a -0.2% m/m decline.
Markets are discounting a 62% chance of a +25 bp ECB rate hike at the ECB’s next meeting on October 29.
US Stock Movers
Chipmakers and AI stocks moved higher on Friday, supporting gains in the broader market. The iShares Semiconductor ETF (SOXX) closed up more than +2%. SanDisk (SNDK) closed up more than +10%, and Lam Research (LRCX), Applied Materials (AMAT), and Seagate Technology Holdings Plc (STX) closed up more than +6%. Also, ARM Holdings Plc (ARM), Western Digital (WDC) and KLA Corp (KLAC) closed up more than +4%, and Micron Technology (MU), Analog Devices (ADI), Microchip Technology (MCHP), ASML Holding NV (ASML), and Texas Instruments (TXN) closed up more than +3%. In addition, Advanced Micro Devices (AMD) and Broadcom (AVGO) closed up more than +2%.
Cryptocurrency-exposed stocks rallied sharply on Friday, as Bitcoin (^BTCUSD) soared more than +5% to a 2-week high after the SEC moved forward with a plan to allow digital versions of securities to start trading in the US. Strategy (MSTR) closed up more than +16% to lead gainers in the Nasdaq 100, and Coinbase Global (COIN) closed up more than +11% to lead gainers in the S&P 500. Also, MARA Holdings (MARA) closed up more than +14%, and Galaxy Digital Holdings (GLXY) closed up more than +10%. In addition, Bullish (BLSH) and Robinhood Markets (HOOD) closed up more than +9%, Riot Platforms (RIOT) closed up more than +8%, and Circle Internet Group (CRCL) and Iren Ltd (IREN) closed up more than +7%.
Software stocks were under pressure on Friday, weighing on the broader market. Thomson Reuters (TRI) closed down more than -5%, and IBM (IBM) closed down more than -3% to lead losers in the Dow Jones Industrials. Intuit (INTU) also fell more than 3%, and Datadog (DDOG), Workday (WDAY), Salesforce (CRM), and ServiceNow (NOW) fell more than 2%. In addition, Oracle (ORCL) and Adobe Systems (ADBE) closed down more than -1%.
Cybersecurity stocks were weaker on Friday, pressuring the overall market. CrowdStrike Holdings (CRWD), Cloudflare (NET), and Okta (OKTA) closed down more than -3%, and Palo Alto Networks (PANW) and SentinelOne (S) closed down more than -2%. Also, Fortinet (FTNT) closed down more than -1%.
Macom Technology Solutions Holdings (MTSI) closed up more than +4% after BMO Capital Markets upgraded the stock to outperform from market perform with a price target of $335.
Yeti Holdings (YETI) closed up more than +2% after Stifel upgraded the stock to buy from hold with a price target of $50.
Xenon Pharmaceuticals (XENE) closed down more than -30% after it paused enrollment in clinical studies of major depressive disorder and bipolar depression.
Nucor (NUE) closed down more than -6% to lead losers in the S&P 500 after forecasting Q3 EPS of $5.55 to $5.65, weaker than the consensus of $5.99.
Netflix (NFLX) closed down more than -4% after Wells Fargo Securities downgraded the stock to underweight from equal weight with a price target of $57.
Steel Dynamics (STLD) closed down more than -4% after forecasting Q3 EPS of $5.34 to $5.38, below the consensus of $5.55.
Earnings Reports (9/21/2026)
BRT Apartments Corp (BRT).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
