Stocks Trade Near Record Highs Despite Rising Yields and Inflation Fears

Key Takeaways

• FOMC minutes revealed the Fed's worry over sticky energy and core inflation, driving a broad retreat in equities as investors pushed rate cut timelines further out.

• Crude oil started the week higher before plunging when President Trump announced a pause on planned airstrikes to pursue negotiations.

• Nvidia delivered a strong Q1 earnings report, proving that the artificial intelligence infrastructure boom is operating with efficiency.

• Gold remained compressed but resilient within a historically elevated range, caught in a tug-of-war between rising Treasury yields and ongoing Middle East uncertainties.

US Market: Stocks Retreat as Yields Face Inflation Fears

U.S. equity markets experienced a volatile week as rising Treasury yields initially pressured investor sentiment before stocks rebounded strongly toward the end of the week. The S&P 500 opened the week around 7,393, declined to nearly 7,334 amid concerns over surging borrowing costs, but later recovered to close near 7,473.

The tech-heavy Nasdaq 100 followed a similar path, opening around 29,065 before falling to 28,569 as growth stocks came under pressure from rising yields, then rebounding sharply to finish near 29,497. Meanwhile, the Dow Jones Industrial Average showed relative resilience, opening at 49,360, dipping to 49,074, and eventually climbing to around 50,500.

The main driver behind the early-week weakness was the sharp rise in U.S. Treasury yields, with long-term yields reaching their highest levels since 2007. Higher yields tend to reduce the attractiveness of equities by increasing borrowing costs for companies and offering investors stronger returns from safer fixed-income assets. This particularly impacts high-growth technology stocks, as higher discount rates can weigh on future earnings valuations. However, improving sentiment later in the week and continued confidence in corporate earnings helped major indices recover their losses and end the week on a stronger note.

Gold Remains Range-Bound, Oil Moves Lower

Crude oil prices started the week strong as concerns ran high of further escalation in the Middle East. However, the narrative flipped on Tuesday morning. Prices dropped by over 2.5% after President Trump announced a temporary pause on an imminent military strike against Iran.

Gold prices traded in a relatively volatile but range bound manner throughout the week, opening around $4,538 and fluctuating between $4,440 and $4,588 as investors reacted to movements in the U.S. dollar and Treasury yields. The precious metal continued to show its typical inverse relationship with the DXY, as the dollar index started near 99.20 and traded within a range of 98.95 to 99.50.

Major Economic Calendar Events for the Upcoming Week