By Joe Wallace and Karen Langley 

U.S. stocks closed out a volatile trading week with gains among cyclical sectors and losses in technology shares as a healing economy and surge in government-bond yields led investors to reassess their positioning.

The S&P 500 ended the week with modest gains, as advances by the energy, financial and industrial sectors weighed against declines in the technology and consumer discretionary groups. The tech-heavy Nasdaq Composite, meanwhile, finished the week with a decline of about 2.1% -- its third consecutive week losing ground.

The Dow Jones Industrial Average, which is less oriented toward fast-growing technology stocks, enjoyed the largest weekly gain of the major indexes, about 1.8%.

"This last week has been a classic correction in growth versus value," said Tom Plumb, president and portfolio manager at Plumb Funds. "But it doesn't mean that it portends something much greater."

Stocks have stumbled in recent weeks as a climb in bond yields has called into question whether low interest rates, which propelled valuations higher for much of the past year, will continue. Yields, which rise as bond prices fall, have rallied in response to expectations of a quickening pace of growth and inflation as the economy reopens from the coronavirus pandemic.

The yield on the 10-year U.S. Treasury note rose again Friday to 1.552%, from 1.547% Thursday, which had been the highest since February of last year. The recent climb in yields came after Friday's stronger-than-expected jobs report. Meanwhile, Federal Reserve Chairman Jerome Powell provided no sign the central bank would seek to stem the rise when he spoke Thursday at The Wall Street Journal Jobs Summit.

"It is all about the bond-yield moves. It is all about Jerome Powell," said Edward Park, chief investment officer at Brooks Macdonald. "There is a huge amount of uncertainty in the market at the moment as to whether the inflation that is widely expected in the short term is transient or whether it is more sustained."

Investors received a shot of promising news about the economy Friday with the February employment report showing the economy added 379,000 new jobs last month, ahead of estimates of 210,000. The unemployment rate was 6.2%, versus the consensus of 6.3%. Those figures add to signs of a slow improvement in the labor market, after data on Thursday showed filings for unemployment benefits reached their lowest level in three months.

But stocks wavered during Friday's trading, with the Dow Jones Industrial Average swinging nearly 700 points from its low to its high.

"There's volatility to be expected, especially after we've had a bit of a selloff, a bit of a rocky week," said Cliff Hodge, chief investment officer at Cornerstone Wealth. "It's not surprising that we're bouncing around. People are looking for direction."

The S&P 500 rose 1.95% on the day, while the Dow Jones Industrial Average advanced 1.9%, or about 573 points. The Nasdaq Composite added 1.55%.

Technology stocks have borne the brunt of the shift in sentiment in recent weeks. Tesla shares, for example, are off 32% from their Jan. 26 record after falling 3.9% Friday. Shares of the electric-vehicle maker have fallen in six of the past seven trading days.

Energy stocks, by contrast, have surged in the new year and are leading the S&P 500's 11 sectors. The group was on pace to end the week up 9.8%.

Oil prices rallied for a second day Friday after OPEC and a Russia-led coalition of oil producers kept most of their production cuts in place, taking the market by surprise. Brent crude rose 3.9% to $69.36 a barrel. The cartel's decision will push the international energy benchmark to $75 a barrel in the second quarter and $80 in the third, analysts at Goldman Sachs Group said.

Overseas, the pan-continental Stoxx Europe 600 ticked down 0.8% Friday. Major Asian indexes also declined. Japan's Nikkei 225 ticked 0.2% lower, while Hong Kong's Hang Seng Index dropped 0.5%.

Write to Joe Wallace at and Karen Langley at


(END) Dow Jones Newswires

March 05, 2021 16:18 ET (21:18 GMT)

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