WSJ: U.S. Stocks Rebound as Market Accepts Fed Rate Hike Expectations, 10-Year Treasury Yield Approaches 5%

Odaily News: After U.S. August CPI data came in slightly above expectations, the market has largely confirmed that the Federal Reserve will raise rates next week, which instead drove a rebound in U.S. stocks on Friday. Investors believe that a clear rate hike path helps reduce policy uncertainty and avoids more aggressive rate hike expectations in the future. The S&P 500 rose 0.9% on Friday, the Dow gained about 1%, and the Nasdaq rose 1%, but all three major indexes still ended the week lower overall. Meanwhile, the 10-year Treasury yield closed at 4.974%, approaching the 5% threshold, up significantly from 4.783% a week earlier. The market currently expects the Fed to raise rates by 25 basis points at next week's meeting. RBC Capital Markets even revised its rate cut expectations for this year to three rate hikes, believing that high rates could further weigh on corporate earnings and equity valuations. Energy markets also continued to exert pressure. Brent crude closed at $104.61 per barrel on Friday, up more than 8% for the week. Houthi attacks on Saudi energy facilities, transportation risks in the Strait of Hormuz, and Saudi Arabia's closure of the East-West oil pipeline have all further intensified supply concerns. Although market sentiment recovered somewhat on Friday, the simultaneous presence of high oil prices and high interest rates still means that U.S. stocks may remain highly volatile going forward. The core question on Wall Street has now shifted from "whether the Fed will raise rates" to "how long will high rates persist, and can inflation be contained without harming the economy and corporate earnings."