Wall Street opened higher Friday morning, but the rebound is beginning under the same pressure that dominated the entire week: investors are still watching the Treasury market almost as closely as stocks.
At the 9:30 a.m. ET opening bell on Friday, August 21, the Dow Jones Industrial Average rose 9.7 points to 52,768.87, the S&P 500 gained 24.5 points to 7,665.68, and the Nasdaq Composite climbed 131.7 points to 26,198.84. The early recovery follows Thursday’s sharp selloff, although all three major indexes remain on course for weekly losses.
The encouraging part for stocks is that the bond market is no longer moving violently. The 10-year Treasury yield was around 4.70% Friday morning and the 30-year yield near 5.25%. Those levels are still high enough to pressure mortgages, corporate borrowing and expensive technology valuations, but the relative stability is giving equities room to recover. Treasury Secretary Scott Bessent’s decision this week to at least double planned purchases of certain longer-term government bonds briefly pushed yields lower, although much of that relief has since disappeared.
Then, 15 minutes after the market opened, investors received a surprisingly strong reading on the American economy.
S&P Global’s August services PMI jumped to 56.8 from 54.6, its strongest level since December 2024 and well above economists’ expectation of 54.0. The broader composite index climbed to 56.0, its highest since April 2022, while the manufacturing PMI slowed to 53.2 from 53.9, a five-month low. Any number above 50 indicates expansion.
The important takeaway is the split beneath those numbers. American factories are still expanding, but growth is slowing as the Iran war disrupts supply chains and higher energy prices interfere with production. Services, meanwhile, are accelerating rapidly. New service-sector business grew at the fastest pace since December 2024, and hiring increased at the strongest rate in 19 months. S&P Global said the surveys are consistent with U.S. economic growth approaching a 3% annualized rate in the third quarter, roughly double the 1.5% pace recorded in the second quarter.
That is good news for businesses and employment, but not automatically good news for interest rates. A stronger economy gives the Federal Reserve less reason to lower borrowing costs and more room to raise rates if inflation remains stubborn. Minutes released Wednesday showed several Fed officials were already prepared to raise rates in July, while others indicated a hike may become necessary if inflation does not continue moving toward 2%.
Retail is producing one of Friday’s clearest winners. Ross Stores rallied more than 5% in early trading after beating Wall Street expectations and sharply raising its annual profit forecast. The discount retailer now expects earnings of $8.61 to $8.77 a share, up from its previous forecast of $7.50 to $7.74. Second-quarter revenue rose about 13% to $6.26 billion, and management expects comparable sales to rise 6% to 7% this quarter.
That result is particularly interesting one day after Walmart plunged more than 9% following its slowest comparable-sales growth in six years. Consumers do not appear to have stopped spending altogether. Instead, this week’s retail results increasingly suggest they are becoming more aggressive about finding value — a trend benefiting discount and warehouse retailers while putting pressure on companies that cannot clearly demonstrate lower prices.
Crypto stocks are another major pocket of strength. Bitcoin was trading near $77,000 Friday morning, up more than 20% for the week, after President Trump urged Congress to advance legislation establishing clearer federal rules for digital assets. The rally is also being fueled by concerns about the dollar and government debt following Treasury’s bond-market intervention. Coinbase and Robinhood were both sharply higher in early trading, while Strategy and several bitcoin miners also extended their gains.
SpaceX is also being watched closely after approximately 319 million previously restricted shares became eligible for trading Thursday. The stock was up less than 1% early Friday, suggesting the second major unlock has so far been absorbed without the type of heavy selling some investors feared.
Oil remains the largest outside threat to Friday’s rebound. Brent crude was trading around $94 a barrel, roughly $20 above its level before the Iran war, as Washington threatens what Bessent described as the toughest economic sanctions yet against Tehran. The continued disruption around the Strait of Hormuz has pushed oil more than 5% higher this week and is feeding directly into concerns about inflation, transportation costs and consumer spending.
There is also a trade deadline hanging over the market. U.S. and Canadian negotiators are meeting for a third consecutive day Friday as they try to finish an agreement before new 50% U.S. tariffs on roughly $20 billion of Canadian goods are scheduled to take effect at 12:01 a.m. Saturday. Canadian officials say the two sides are close, but unresolved issues remain. Any breakthrough — or breakdown — could move industrial, transportation, construction and consumer stocks before Friday’s close.
For the rest of the trading day, the most important number may not be the Dow. It is 4.70%.
If the 10-year Treasury yield can remain around that level or move lower despite the stronger PMI report, Friday’s rebound has room to broaden. If yields begin climbing again toward the week’s highs, technology and AI shares could quickly come back under pressure.
Oil is the second number to watch. A renewed move toward $95 Brent would reinforce inflation fears. And after this morning’s surprisingly strong services report, investors have even less margin for another inflationary shock.
Friday may therefore determine whether this week ends as a temporary bond-market scare — or the beginning of a more serious reassessment of what higher borrowing costs mean for stocks, consumers and the AI investment boom.
JBizNews Desk | New York
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