Dow climbs 0.5%, S&P edges up as oil retreats on peace hopes

The Dow Jones Industrial Average rose 0.5%, the S&P 500 gained 0.1% and the Nasdaq composite fell 0.6%, as oil retreated on hopes for peace talks.

"If the war continues, crude could reach $125 a barrel, with available inventories insufficient to offset supply losses," David Roche, president of Roche Advisory, said.

The divergence between the Dow and the Nasdaq highlighted a rotation out of growth stocks into value-oriented sectors. Technology shares extended their decline after disappointing earnings from two industry heavyweights added to selling pressure on semiconductor stocks. Brent crude fell 3.9% to $96.80 a barrel, retreating from the $100 level breached earlier this week, as traders weighed the prospects for a ceasefire. The retreat in oil helped ease concerns that prolonged energy costs would reignite inflationary pressures and force central banks to keep monetary policy tight for longer.

If peace talks progress, lower energy costs could ease inflation concerns and support further equity upside. But the rotation out of technology into value sectors may persist as investors reassess AI-related spending against earnings growth. Markets now turn to next week's Federal Reserve decision for further direction on the rate path.

Asian markets ended broadly lower Friday, tracking the mixed close on Wall Street. Japan's Nikkei 225 fell 2.73%, South Korea's Kospi dropped 5.72% and China's Shanghai Composite lost 1.61%. Hong Kong's Hang Seng Index declined 0.98%, while Australia's ASX 200 lost 0.75%. European markets opened higher, with the Stoxx Europe 600 rising 0.5%, led by gains in Spain and Sweden.

The U.S. 10-year Treasury yield held near yearly highs reached earlier this week, as traders increased bets that central banks may need to keep policy tight for longer. The dollar strengthened broadly. Gold traded near $4,050 an ounce after falling about 2% in the previous session as rising bond yields reduced demand for the non-yielding asset. The Indian rupee closed unchanged at 96.57 per dollar.

The stabilization in U.S. equities followed a volatile week. The S&P 500 had fallen 1.2% on Thursday, while the Nasdaq slumped 2.2% in its steepest single-day decline since late June, as disappointing earnings from two technology companies added to selling pressure in semiconductor shares. The renewed selloff in technology shares on Wall Street and the jump in crude oil prices had prompted investors to scale back risk exposure across global markets.

European Central Bank President Christine Lagarde said policymakers could consider another rate increase after keeping the deposit rate unchanged at 2.25%, adding to the global tightening bias. Markets also raised expectations of a U.S. Federal Reserve rate increase by September as energy prices continued to rise, though Friday's oil retreat may temper those bets.

Investors are expected to keep a close watch on developments in diplomatic negotiations, crude oil prices and signals from the Federal Reserve as they gauge whether the latest bout of volatility in global equities has further to run.

This article is for informational purposes only and does not constitute investment advice.