Stocks finished mixed Friday, as investors continued to closely track moves in the bond market amid mounting indecision with respect to growth and inflation bets and their impact on the Fed's interest rate path.
The Dow Jones Industrial Average finished up 169 points, 0.50%, to 33,869, while the S&P 500 gained 0.22% and the tech-focused Nasdaq slipped 0.61%.
For the week, the Dow was down 0.2%, the S&P 500 lost 1.1% and the Nasdaq shed 0.2%.
Bond yields have been flashing recession signals for a number of months, now, with corporate layoffs running at their fastest pace since 2008 over the three months ending in January and broader economic indicators suggesting the chances of a near-term contraction are gathering pace.
Inflation prospects, meanwhile, continue to be the subject of intense debate ahead of next week's CPI reading on Tuesday. Last week's red-hot January jobs report is still reverberating through the markets as well.
The indecision was reflected in vastly different outcomes for Treasury auctions this week, with historically strong demand for the sale of $35 billion in 10-year notes Wednesday and a weak uptake in yesterday's $21 billion sale of 30-year bonds.
Bond yields were marked higher in early New York trading, with benchmark 10-year notes trading at 3.71% and 2-year notes pegged at 4.532% - near the highest since early November, putting the gap between the two benchmarks at around 77 basis points.
According to a study from the San Francisco Federal Reserve, a sustained inverted yield curve has preceded all of the nine recessions the U.S. economy has suffered since 1955, making it an extremely accurate barometer of financial markets sentiment.
The U.S. dollar index, which tracks the greenback against a basket of its global peers, was marked 0.35% higher at 103.58.
The CME Group's FedWatch suggests both a 90.8% chance of another 25 basis point rate hike from the Fed next month in Washington, with bets on a follow-on move in May holding at around 72.1%.
A quote from Bank of America's closely-tracked 'Flow Show' report summed it up well: "So market dependent on Fed. And Fed dependent on data. And data dependent on economy that market & Fed have found impossible to forecast,"
Oil prices were also on the move, with Brent crude rising $1.99 to $86.49 per barrel, after Russia said it would cut its daily production by around 500,000 barrels, a tally that comprises around 5% of its overall output, in response to western sanctions.
Stocks, meanwhile, have been navigating a mixed series of earnings throughout most of the week, with tech stocks careening on the back of headlines noting weakness in AI-focused investments, fading demand and pending job cuts.
In terms of individual stocks, Lyft (LYFT) shares nosedived 36.4% following the ride-sharing group forecast softer-than-expected near term revenues and a plan to reduce prices and claw back market share lost to larger rival Uber Technologies (UBER).
PayPal (PYPL) shares gained 3% higher after the online payments group posted better than expected fourth quarter earnings that were partly clouded by the retirement of CEO Daniel Schulman.
Adidas AG shares slumped nearly 11% in German trading Friday after the sportswear group said full-year sales would likely decline sharply from 2022 levels thanks in part to its decision to cut ties with the American entertainer Kanye West.
Expedia Group (EXPE) shares, meanwhile, fell 8.6% after the travel and experience booking website posted weaker-than-expected fourth quarter earnings thanks in part to severe December weather that clipped bookings growth.
In overseas markets, Europe's Stoxx 600 was marked 0.96% lower by the close of Frankfurt trading while Britain's FTSE 100 fell 0.536% following data showing the U.K. economy narrowly avoided recession over the final months of last year.
Overnight in Asia, the region-wide MSCI ex-Japan index was marked 1.07% lower into the close of trading while the Nikkei 225 gained 0.31% as the yen fell notably against the dollar amid reports that Kazuo Ueda, a dovish policymaker, will be next Governor of the Bank of Japan.
