Wall Street rebounds as Bitcoin jumps 20% in biggest weekly rally since 2023

Fresh updates from the financial markets indicate that US stocks and global equities recovered on Friday after a volatile week, while Bitcoin extended its sharp surge as market participants assessed the US Treasury’s efforts to contain a climb in long-term borrowing costs.

The S&P 500 advanced 0.5% and the Dow Jones Industrial Average rose 0.8%, while the Nasdaq Composite further noted 0.4%. The rebound came after stronger-than-anticipated US business activity offered some backing to equities, although concerns over inflation, government borrowing and elevated bond yields remained.

Bitcoin was the standout mover. The cryptocurrency advanced nearly 6% to around $77,000 and was up more than 20% for the week, putting it on course for its strongest weekly performance since 2023.

The surge has been helped by the US Treasury’s decision to gain purchases of its own bonds, a move intended to inject liquidity into the market and ease pressure on longer-term yields. Investor sentiment additionally received a lift from US President Donald Trump’s renewed propel for legislation designed to promote wider use of cryptocurrencies.

The Treasury’s intervention followed a sharp climb in long-dated US borrowing costs. The 30-year Treasury yield recently touched marks not noted since 2007, intensifying concerns that elevated financing costs could weigh on the economy and financial markets.

Yet the bond-buying programme has so far provided only temporary relief.

"The move from the Treasury hasn't yet had a lasting impact on longer-dated US Treasury yields," stated Thahbib Rahman, an market observer at Block Scholes. He stated the scale of the purchases remained small relative to the Treasury market and did not address some of the structural forces pushing yields elevated.

Market participants are now turning their attention to Treasury Secretary Scott Bessent’s promised measures to bring down long-term borrowing costs and to the week ahead’s Jackson Hole gathering of central bankers, where markets will look for clues on the future path of monetary policy.

Joe Maher at Capital Economics anticipates long-dated Treasury yields to stabilise over the upcoming weeks as some of the recent turmoil in global government bond markets eases.

But Mark Hackett at Nationwide stated the recent softness in equities should not be dismissed. He pointed to concerns around government debt issuance and interest rates, uncertainty over US-Iran negotiations and doubts surrounding the scale of investment in artificial intelligence.

"None of these are new, but given the elevated expectations and positioning of market participants, the bar for positive surprises has risen," Hackett stated.

Ulrike Hoffmann-Burchardi at UBS Chief Investment Office stated the bond market turbulence was not at present severe enough to justify cutting exposure to equities, but argued that it strengthened the case for diversification.

Bank of America strategist Michael Hartnett offered a more bearish scenario if the Treasury fails to propel the 30-year yield below 5%.

Such an outcome, he stated, could weaken the dollar and encourage market participants to bet against leveraged parts of the market, including AI infrastructure firms, private credit and financial stocks, ahead of the November midterm elections.

The dollar remained close to its weakest level since May, while US Treasury prices eased modestly on Friday.

Crude prices additionally remained elevated as markets continued to monitor the conflict between the United States and Iran and the disruption to energy flows from the Middle East.

Brent crude was up 0.3% at $94.03 a barrel, while West Texas Intermediate was little changed at $86.75.

European equities additionally recovered, with London’s FTSE 100, Paris’ CAC 40 and Frankfurt’s DAX all closing elevated. The CAC 40 advanced 0.4%, ending a nine-session losing streak.

That stated, European markets remained on course for their weakest weekly performance in nearly two months, according to Trade Nation market observer David Morrison.

"The escalation in the US-Iran war, elevated crude prices and inflation concerns are all factors weighing on equities," Morrison stated.

Asian markets were mixed earlier in the day. Seoul benefited from upside in chip stocks, while Hong Kong advanced and Tokyo declined. Shanghai's benchmark was little changed.

The next major test for markets will come from the Jackson Hole meeting, where market participants will be looking for signals on interest rates and the broader policy response to persistent inflation and rising government debt.