The major averages staged an afternoon recovery on Friday, leaving the S&P 500 (+0.2%) and Nasdaq Composite (+0.4%) with modest gains while the DJIA (-0.2%) finished slightly lower. The improvement followed a weaker first half of the session, when rising Treasury yields and broad selling pressure had pushed the major averages to their session lows.

The recovery was driven largely by renewed strength in technology stocks and select mega-cap names rather than a broad-based advance. Only three S&P 500 sectors finished higher, while the Russell 2000 (-0.5%) and S&P Mid Cap 400 (-0.3%) continued to trail the large-cap indices. That divergence left the Nasdaq Composite as the only major index to finish the week with a week-to-date gain.

Semiconductor stocks provided the clearest source of leadership during the afternoon. The PHLX Semiconductor Index surged 2.8%, helping the information technology sector (+0.8%) finish atop the sector standings. Memory and storage names were particularly strong, with Sandisk (SNDK 1791.82, +177.43, +10.99%), and Seagate Tech (STX 858.79, +55.66, +6.93%) posting sizable gains amid continued enthusiasm surrounding AI data-center demand and tight storage supply.

Coherent (COHR 317.36, +21.38, +7.22%) was another standout, finishing among the best-performing S&P 500 components after announcing an expansion of its Pluggable Optical Line System portfolio targeting high-capacity interconnect requirements for cloud and AI infrastructure.

Mega-cap strength provided another source of support, leaving the Vanguard Mega Cap Growth ETF up 0.4%.

Amazon (AMZN 253.71, +2.52, +1.00%) was a standout and helped the consumer discretionary sector finish unchanged despite broader weakness within the group. The industrials sector (+0.5%) was another of the three sectors to finish higher, while the financials sector (+0.1%) received some support from continued strength in Coinbase Global (COIN 194.25, +20.28, +11.66%) and Robinhood Markets (HOOD 119.82, +10.01, +9.12%) following yesterday's announcement of the SEC's "Innovation Exemption" allowing crypto exchanges to offer tokenized equities and a surge in Bitcoin past the $81,000 mark.

The afternoon improvement came despite renewed pressure from Treasury yields. The 10-year note yield rose five basis points to 5.00%, leaving it two basis points higher for the week and reversing most of Thursday's decline. Rate-sensitive areas consequently remained under pressure, with the utilities sector (-1.3%) finishing at the bottom of the standings and the iShares U.S. Home Construction ETF falling 1.3%.

The materials sector (-1.1%) was another pronounced laggard as Nucor (NUE 248.38, -16.76, -6.32%) and Steel Dynamics (STLD 235.26, -10.09, -4.11%) remained under pressure following disappointing third-quarter earnings guidance.

The communication services sector (-0.7%) also finished lower after beginning the session on a stronger note, with Netflix (NFLX 71.77, -3.54, -4.70%) weighed down by a Wells Fargo downgrade to Underweight from Equal Weight.

Crude oil moved in the opposite direction of Treasury yields, with WTI settling 1.8% lower at $100.24 per barrel, nearly flat for the week.

Friday's session ultimately featured a meaningful recovery from broad morning weakness, but participation remained relatively narrow. Semiconductor and mega-cap strength was enough to lift the S&P 500 and Nasdaq into positive territory despite higher Treasury yields, weakness in small and mid-cap stocks, and losses across most S&P 500 sectors. The Nasdaq's relative strength was also sufficient to leave it as the only major index with a gain for the week.

U.S. Treasuries had a poor finish to the week, which locked in weekly losses for the 10-year note and shorter tenors while the long bond continued its recent show of outperformance, recording a modest gain for the week. The 2-year note yield settled up five basis points to 4.74% (+10 basis points this week), and the 10-year note yield settled up five basis points to 5.00% (+2 basis points this week). 

• Russell 2000: +15.3% YTD
• Nasdaq Composite: +14.1% YTD
• S&P 500: +11.8% YTD
• S&P Mid Cap 400: +10.5% YTD
• DJIA: +7.5% YTD