Wall Street Rallies Friday as US Business Activity Hits a 4-Year High — But the Week Still Ends in the Red
A blowout services-sector reading pushed the Dow up more than 500 points to close out the week, even as bond volatility left all three major indexes with a weekly loss.
Wall Street closed out a bumpy week on a high note Friday, with the Dow Jones Industrial Average climbing roughly 1% and the S&P 500 and Nasdaq each adding 0.4%, as a surprisingly strong reading on U.S. business activity helped investors shake off a rough stretch driven by rising Treasury yields.
The S&P Global Flash U.S. Composite PMI, a closely watched gauge of economic momentum, jumped to 56.0 in August from 54.5 in July — its highest level since April 2022, according to S&P Global's flash release. The service sector led the acceleration, with its own activity index jumping to 56.8, a 20-month high, while companies added workers at the fastest clip since early last year. Survey data now point to annualized third-quarter growth approaching 3%, up sharply from the 1.5% pace in the second quarter.
Winners and Losers
The Dow's advance was led by Goldman Sachs, up nearly 4%, along with gains in Merck and Salesforce. Moderna jumped more than 9% on the day. On the losing side, chipmaker Marvell Technology fell 6% on profit-taking ahead of its earnings report due Aug. 27, while automatic-test-equipment maker Teradyne dropped nearly 4% after an analyst downgrade, and ad-tech firm AppLovin slipped after a price-target cut.
ANNUALIZED GROWTH APPROACHING 3%
Despite Friday's gains, all three major indexes finished the week lower after a bond sell-off pushed longer-term Treasury yields to multi-month highs earlier in the week, pressuring rate-sensitive stocks. Information technology names were among the hardest hit over the five sessions, with the sector shedding more than 3% for the week even as crypto-adjacent stocks bucked the trend — bitcoin posted its best weekly gain since 2023, and shares of Coinbase and Robinhood both climbed on the back of it.
Economists cautioned that the PMI's strength cuts two ways for markets. Faster growth and easing inflation pressure are good news for corporate earnings, but a hot economy also complicates the case for the interest-rate cuts investors have been pricing in, a tension likely to be tested next week when Federal Reserve officials gather for the Jackson Hole economic symposium.
For now, traders are treating Friday's rally as validation that the economy remains resilient even under the weight of tariffs and elevated borrowing costs — a reprieve heading into a September that's shaping up to be pivotal for Fed policy.