U.S. stocks rose on Friday, August 21, but still recorded a difficult week as higher government-bond yields, elevated oil prices and uncertainty surrounding the Middle East conflict unsettled investors. The S&P 500 gained 0.4% in the final session to close at 7,674.37, the Dow Jones Industrial Average advanced 1% to 53,277.01 and the Nasdaq Composite added 0.4% to 26,180.45, according to Associated Press market data.
Those gains only reduced the weekly damage. The S&P 500 lost 1.4% and the Nasdaq fell 2.1%, ending three-week winning streaks, while the Dow declined 0.8% for a second consecutive weekly loss. Reuters reported that fluctuating Treasury yields and limited clarity over progress in the Middle East weakened risk appetite, with technology shares particularly exposed because higher borrowing costs reduce the present value investors assign to future earnings.
The bond market remained the main source of pressure. Long-term Treasury yields had climbed to multiyear highs during the week as traders weighed heavy government borrowing, persistent inflation and energy-supply risks. Oil prices also stayed elevated amid the conflict involving the United States, Israel and Iran, renewing concern that more expensive fuel and transport could spread through consumer prices and keep central banks cautious about reducing interest rates.
Friday nevertheless brought evidence that the U.S. economy remained resilient. S&P Global said its preliminary Composite Output Index rose to 56.0 in August from 54.5 in July, its strongest reading since April 2022. The flash services purchasing managers index increased to 56.8 from 54.6, the highest since December 2024, while manufacturing growth slowed. A reading above 50 indicates expanding activity.
Healthcare and financial shares helped lift the S&P 500 on Friday, Reuters reported, while Robinhood, Coinbase and Strategy gained as bitcoin reached its highest level since late May. The mixed picture left investors balancing stronger business activity and corporate-profit prospects against the possibility that robust demand, costly energy and high yields could prolong restrictive financial conditions.
Attention now turns to major technology earnings, including Nvidia, and to upcoming U.S. inflation and consumer-confidence releases. Those reports may show whether growth can remain firm without intensifying price pressures. Markets will also monitor Treasury yields and developments affecting oil flows, because another rise in either could challenge equity valuations after the benchmarks' latest retreat.
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