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Stocks End Mixed as Banks Decline, Nasdaq Rises on Tech Rebound

Financial stocks fall after the Federal Reserve says it won't extend a capital break it granted big banks. Technology stocks push higher.

Stocks finished mixed on Friday with the Nasdaq rebounding as Treasury yields retreated following the Federal Reserve's announcement that it would allow a capital break for banks to expire.

The Dow Jones Industrial Average declined 234 points, or 0.71%, to 32,627, the S&P 500 eased 0.06%, while the Nasdaq gained 0.76%.

Visa  (V) - Get Visa Inc. Report ended down 6.2% after The Wall Street Journal reported the Department of Justice was investigating the company's debit card business.

For the week, the Dow fell 0.5%, while the S&P 500 and the Nasdaq each declined 0.8%.

Treasury yields came off earlier highs Friday after the Fed said in a statement it would allow a rule that relaxed the supplementary leverage ratio to expire March 31 as planned. 

Banks had been pushing for an extension, especially as the Treasury market has seen a recent bout of volatility. The relaxed rules allowed banks to stock up on Treasury bonds without the need to set aside excess capital to compensate for them.

The yield on the 10-year Treasury traded at 1.723% on Friday after a spike drove it to 1.75% this week for the first time since January 2020. Yields were on track to rise for an eighth straight week.

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Bank stocks like JPMorgan Chase  (JPM) - Get JP Morgan Chase & Co. Report and Goldman Sachs  (GS) - Get Goldman Sachs Group Inc. (The) Report fell Friday, coming off all-time highs they hit Thursday.

The recent rise in Treasury yields has hit technology shares especially hard. The Nasdaq slumped more than 3% Thursday as inflation worries sent yields soaring to their highest levels in 14 months.

The Federal Reserve's continued support for the U.S. economy has increased expectations for higher inflation this year. Fed Chairman Jerome Powell, however, has said the central bank believes an inflation bump would be temporary given the COVID disruption to the labor market.

In an editorial for The Wall Street Journal, Powell reiterated that the central bank would provide the U.S. economy with support “for as long as it takes.”

Fed Remains Dovish: Is It a Buy Signal or Time to Take Profits?

Nike  (NKE) - Get Nike Inc. Report finished lower Friday after the sports-apparel giant's fiscal-third-quarter sales missed Wall Street estimates as supply-chain problems delayed shipments to customers in North America.

"Bottom line, we never like to see a revenue miss, however, we believe the cause behind it to be both reasonable and more importantly, something that will be made up in the current quarter as it is a supply bottleneck issue that will be cleared up and not a demand issue, which would certainly be cause for concern," said Jim Cramer and the Action Alerts PLUS team. AAP holds Nike in its portfolio.