US equities closed higher on Friday, August 21, clawing back part of a rough week driven by a sharp jump in long-term Treasury yields. The S&P 500, Dow Jones Industrial Average and Nasdaq Composite all posted gains on the day, helped by a stronger-than-expected reading on business activity and a blowout earnings report from Ross Stores. Even so, all three major indices finished the week lower, a reminder of how sensitive sentiment remains to the bond market heading into next week's Jackson Hole symposium.

A Bounce After a Bond-Driven Selloff

The S&P 500 added 0.4% to close at 7,674.37, the Nasdaq Composite rose 0.4% to 26,180.45, and the Dow Jones Industrial Average jumped 1% to 53,277.01, with the small-cap Russell 2000 up 0.9%. The gains only partly offset a difficult week: the S&P 500 still finished down 1.4%, the Nasdaq lost 2.1% and the Dow shed 0.8%. The selloff had been driven by a surge in long-dated Treasury yields, with the 30-year touching 5.34% earlier in the week, its highest level since 2007, on concerns over government spending, heavy long-bond issuance and inflation running above the Fed's target.

Flash PMI Points to Accelerating Growth

Friday's economic data added to the risk-on tone. S&P Global's flash composite PMI jumped to 56.0 in August, a 52-month high and well above the 54.0 estimate, driven by a surge in the services component to 56.8, its best reading since December 2024. Manufacturing lagged, slipping to a five-month low of 53.2 and missing forecasts, as firms pulled back on safety-stock building. Employment rose to its highest level since January 2025, with hiring concentrated in services, while both input costs and selling prices grew at their slowest pace in months, a reading markets took as consistent with resilient growth without a fresh inflation scare.

Ross Stores Headlines a Mixed Earnings Tape

Discount retailer Ross Stores was the standout corporate story, reporting second-quarter revenue of roughly 6.26 billion dollars against estimates near 6.18 billion, with comparable sales up 10% on stronger customer traffic. Earnings per share of 2.66 dollars beat expectations of 1.94 dollars, helped in part by a tariff-refund benefit, and management raised full-year guidance well above prior forecasts. Elsewhere the tape was mixed: MKS Instruments rallied on a strong quarterly report, while Flowers Foods dropped after weak results. Teradyne fell close to 4% following a broker downgrade, and Marvell Technology lost around 6% in apparent profit-taking ahead of its own earnings due the following week.

Eyes Turn to Jackson Hole

With the week's data and earnings absorbed, attention is already shifting to next week's calendar. The Federal Reserve's Jackson Hole symposium runs from August 27 to 29, culminating in a keynote from Chair Kevin Warsh, his first as head of the central bank. Fed funds futures and prediction markets continued to assign only a slim probability to a September rate cut, with debate instead centered on whether the Fed holds steady or moves toward a hike. Nvidia's earnings report, due after the close on August 26, adds a second major catalyst just before Warsh speaks, leaving traders positioning cautiously into a stretch of events capable of moving markets sharply.

Daily market analysis by BCM Markets.