By Christine Idzelis and William Watts
U.S. stock benchmarks closed mostly higher Friday, following choppy trade, after oil prices rebounded on the back of reports of a missile strike on a Saudi Aramco facility and as investors continued to weigh rising interest rates.
The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite each booked a second straight week of gains, as investors largely looked past the Russia-Ukraine war to increasingly hawkish commentary from Federal Reserve officials.
How did stock indexes perform?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.15% rose 153.30 points, or 0.4%, to close at 34,861.24.
The S&P 500 /zigman2/quotes/210599714/realtime SPX -1.02% advanced 22.90 points, or 0.5%, to finish at 4,543.06.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -0.68% fell 22.54 points, or 0.2%, to end at 14,169.30.
On Thursday , the Dow Jones Industrial Average rose nearly 350 points, or 1%, while the S&P 500 gained 1.4% and the Nasdaq Composite climbed 1.9%.
For the week, the Dow booked a gain of 0.3% , the S&P 500 rose 1.8% and the Nasdaq advanced 2%.
What drove the markets?
U.S. stocks indexes ended a choppy trading session Friday with mixed results after oil futures turned higher following news reports that a missile strike had caused an explosion and fire at a Saudi Aramco facility in Jeddah. Yemen’s Iran-backed Houthi rebels have claimed credit for past strikes on Saudi facilities.
Meanwhile, the Federal Reserve’s monetary policy and the Russia-Ukraine war remained in focus for investors.
“Investors are readjusting their sights for how high interest rates must go and how fast those rates must rise in order to reduce the inflation pressure,” according to James Solloway, chief market strategist and senior portfolio manager at SEI Investments Co.
The Russia-Ukraine war has been “a major shock” that risks making the problem of inflation “even more intense” before the surge in cost of living starts to come back down, said Solloway, in a phone interview Friday. “Even if peace breaks out tomorrow,” he said that shortages of energy, food and metals will remain a concern as Russia will continue to be “isolated” from the West.
“Investors should expect more volatility and a very mixed equity performance,” said Solloway. “The specter of stagflation is beginning to rise.”
Information technology /zigman2/quotes/210600162/delayed XX:SP500EW.45 -0.89% and consumer discretionary were the worst-performing sectors in the S&P 500 index Friday, each seeing losses of around 0.1%, according to FactSet data, at last check. The energy sector /zigman2/quotes/210600058/delayed XX:SP500EW.10 +1.33% had the biggest gains, up about 2.3%.
Rising yields are “bringing back concern about valuations among those more expensive stocks in the market,” said Jeff Kleintop, chief global investment strategist at Charles Schwab, in a phone interview Friday. “Financials, energy and more cyclical parts of the market are doing well,” he said. The S&P 500’s financials sector /zigman2/quotes/210599997/delayed XX:SP500EW.40 -1.30% closed about 1.3% higher Friday, FactSet data show.
Meanwhile, something “unusual” has happened in the stock market lately, according to Kleintop. He said that financial conditions have eased since initially tightening on the Russia-Ukraine war, “even though the Fed is talking up being more hawkish.” While that has helped to lift the stock market, the recent rally is probably “limited,” in his view, as financial conditions “ultimately” will tighten again should the Fed continue its “hawkish messaging.”