(Updates with index/price moves, macroeconomic data, and economist comments from the first paragraph.)
US equity indexes rose amid a broad-based rally and strong gains in mega-cap technology names, as investors seemingly whistled past a bear steepening in the yield curve.
The Nasdaq Composite climbed 0.6% to 27,366.17, the S&P 500 advanced 0.6% to 7,811.54, and the Dow Jones Industrial Average marched 0.8% higher to 51,654.95 on Friday. All but two sectors, energy and communication services, rose. Real estate, consumer discretionary, and healthcare led the gainers at the close.
Among stocks with market capitalization exceeding $200 billion, as many as seven of the top 10 were technology companies, according to data compiled by Finviz. Alibaba (BABA) led the gainers in this mega-cap category, up 5.4%.
The University of Michigan's preliminary consumer sentiment index declined to 46.3 in October from 48.1 in September, versus the 47.6 expected in a Bloomberg-compiled survey. This month's print is the second-worst on record after the 44.8 reported in May, according to a Jefferies note. Respondents pegged one-year inflation expectations at 4.7%, up from 4.6%, while the five-year figure increased to 3.5% from 3.4%.
The path forward for inflation expectations will depend on oil and gasoline prices, Thomas Simons, Jefferies Chief US Economist, said in the note.
"There is a good deal of evidence that suggests that there is a good amount of oil moving through the Strait of Hormuz out to the rest of the world, but the vulnerability of thin stocks of reserves in many places, seasonal demand, increased shipping costs, and limited bandwidth for refining are going to keep the price that consumers are most focused on, gasoline, elevated for some time to come," Simons said.
While the probability of the Federal Reserve leaving its target rate unchanged in October was 81% late Friday, the market sees a 71% likelihood of a 25-basis-point increase in December and assigns a 45% probability of another move higher of the same magnitude in March, according to the CME FedWatch tool.
Term premium, or the extra payout for investing in 10-year Treasuries instead of just rolling over short-dated securities for the same time, hit 1.2 percentage points this week, up from 0.68 percentage points a year ago, according to data compiled by Bloomberg. The move reflects concerns about the US fiscal deficit, rising borrowing costs at Treasury auctions, corporate borrowing to fund the massive artificial intelligence infrastructure spend, and stubborn inflation.
Most Treasury yields rose, with a recent acceleration at the long end steepening the yield curve. The two-year jumped 3.7 basis points to 4.79%, the strongest level since about mid-2024. The 10-year rate climbed 1.1 basis points to 5.24%, and the 30-year yield was little changed at 5.60%. Both the 10- and 30-year yields traded close to their highest levels since 2002.
US President Donald Trump said he'll soon release news concerning diesel and claimed that nearly record-high prices will soon come "tumbling" down, Al Jazeera, a Middle Eastern broadcaster, reported. "We have a big announcement coming up on diesel, I think," the US president said from the White House.
Front-month US West Texas Intermediate crude oil contract edged 0.2% higher to $91.65 per barrel, and global benchmark Brent rose 0.1% to $104.41 per barrel.