Market Indexes Shake Off the Blues for a Green Friday Finish

The stock market is ending the week on a high note. In particular, the Dow Jones Industrial Average (DJINDICES: ^DJI) is reaching fresh all-time highs with a 0.9% gain as of 1:15 p.m. ET.

The S&P 500 (SNPINDEX: ^GSPC) is also sniffing around record levels after a 0.7% gain, while the Nasdaq Composite (NASDAQINDEX: ^IXIC) index stands just a bit further from its recent records with a 0.5% jump.

All three indexes are up significantly for the week after dipping into negative territory on Tuesday and Wednesday.

^DJI data by YCharts

Cooling yields and peace talks lift the market

The bond market calmed after rattling investors for most of the week. The 10-year Treasury yield dropped to around 4.55%, while the 30-year yield fell to approximately 5.07%. That might not sound like much, but when the 30-year had climbed to its highest level since before the 2008 financial crisis earlier this week, any retreat feels like a gift.

Lower yields mean cheaper borrowing for companies and better math for stock valuations, especially for tech companies whose earnings are years away. That's a winning idea, since many of the largest stocks on the market today are tech giants with deep interests in the ongoing AI boom.

Why are the bonds cooling off on Friday? Washington takes that credit. Secretary of State Marco Rubio signaled that peace talks with Iran are finally going somewhere, suggesting an end to the blocked Strait of Hormuz and lower pressure on oil prices.

Image source: Getty Images.

Individual stocks had plenty of drama, too. Qualcomm (NASDAQ: QCOM) surged about 12% after announcing an expanded partnership with automaker Stellantis (NYSE: STLA). The deal puts Qualcomm's chips and AI tech into the next generation of cars, and investors loved it. However, Qualcomm's good news barely affected the top indexes, because a $200 billion market cap is peanuts in the $73 trillion cap-weighted S&P 500 or the $52 trillion Nasdaq Composite.

Apple (NASDAQ: AAPL) quietly added $74 billion to its market cap with a modest 1.6% gain -- just another day of mild market noise. Yet, Apple swings a heavy hammer with its $4.5 trillion market cap, so that small move made the biggest difference to the cap-weighted indexes today. It really doesn't take much on a generally peaceful market day.

As for the Dow's record, there wasn't much drama involved. Goldman Sachs (NYSE: GS) saw a 1.7% gain to $1,005 per share and Caterpillar (NYSE: CAT) rose 3.1% to $892. In a price-weighted system, these high-dollar moves in the financial and industrial sectors provide plenty of "lift" to the Dow. But the moves themselves simply reflect the underlying macroeconomic trends. Treasury yields and credible signs of Iranian peace can be soothing at the end of a busy week.

Yet another winning week

The "winning week" narrative is back in play. If the S&P 500 holds these gains, it will be its eighth straight week of winning -- a feat not seen since the end of 2023. Even with the Dow jumping 2.2% this week, the volatility we saw on Tuesday and Thursday serves as a reminder that markets rarely move in a straight line.

The noise is loud, but the signal underneath is still about corporate earnings, interest rates, and whether the economy can keep growing. The bullish trends could continue next week and next month, depending on developments in the Persian Gulf and how the global economy responds.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Goldman Sachs Group, and Qualcomm. The Motley Fool recommends Stellantis. The Motley Fool has a disclosure policy.