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U.S. and Canadian stocks ended lower on Friday as investors continued to fret about rising Treasury yields and the prospect of more central bank rate hikes to combat inflation. Trading was volatile, as dip buyers attempted to enter the market, but overall market sentiment remained weak and sellers had the upper hand.

“It’s getting real now,” BMO chief economist Douglas Porter said in a note. “Financial markets are fully coming to grips with the extent of the inflation fight central banks have on their hands.”

The tech-heavy Nasdaq registered its lowest close since 2020, notching a fifth straight weekly loss, its longest losing streak since the fourth quarter of 2012. The S&P 500 also posted its fifth straight weekly loss, its longest string of weekly losses since the second quarter of 2011. In Canada, it was the sixth straight week of declines for the TSX, the longest losing streak since 2014.

The Federal Reserve hiked its key lending rate by 50 basis points on Wednesday, an event initially welcomed by investors thanks to Chair Jerome Powell downplaying the appetite for even larger rate hikes at future meetings. But investors soon had doubts the comment was all that meaningful, amid a number of rate hikes by central banks in other countries this week, including in Britain, Australia, India, Brazil and Chile.

“Ninety-five percent of the driver of the market right now is long-term interest rates,” said Jay Hatfield, founder and chief executive of Infrastructure Capital Management in New York.

And those rates just keep going higher.

The 10-year U.S. Treasury yield broke through the 3% level early this week and, by late Friday, was at 3.14%.

“In just the past two months alone, these yields have now surged more than 135 basis points. Such a rapid rise in long-term rates has not been on offer since the big and fast tightening in 1994/95,” noted Porter.

The long-term yields have been partly rising on the Fed’s plans to beginning quantitative tightening - essentially shrinking the size of its balance sheet - starting in June.

Canada’s bond market has closely tracked U.S. Treasuries. “In fact, 10- and 30-year Government of Canada bonds vaulted even more forcefully this week, jumping almost 20 basis points, to breach the 3% threshold,” noted Porter. “No GoC yield had been north of 3% since 2013 prior to this week, and 10s have now doubled in the past year.”

Canada’s 5-year bond - influential on the setting of fixed mortgage rates - on Friday yielded as much as 2.957%, the most in over a decade.

Those higher bond yields Friday in Canada came despite domestic jobs data showing fewer jobs were added last month than expected to the economy.

The U.S. Labor Department Friday, by contrast, presented stronger-than-expected jobs data with nonfarm payrolls increasing by 428,000 jobs in April, versus expectations of 391,000 job additions, underscoring the economy’s strong fundamentals despite a contraction in gross domestic product in the first quarter.

The unemployment rate remained unchanged at 3.6% in the month, while average hourly earnings increased 0.3% against a forecast of a 0.4% rise.

Nine of the 11 major S&P 500 sectors declined on Friday. Energy had a 2.9% gain as oil prices climbed on supply concerns.

“Oil is up again, continuing the inflationary worries that we are seeing and energy is bucking the trend of a very weak market. But the higher natural gas and crude oil prices have been tailwinds for the energy sector this year,” said Ryan Detrick, chief market strategist for LPL Financial.

Megacap growth stocks slipped, with a few exceptions including Apple Inc, which rose 0.5%. Wells Fargo & Co declined 0.5% to lead losses among big banks.

The Dow Jones Industrial Average fell 98.6 points, or 0.3%, to 32,899.37, the S&P 500 lost 23.53 points, or 0.57%, to 4,123.34 and the Nasdaq Composite dropped 173.03 points, or 1.4%, to 12,144.66.

Most traders are expecting a 75 basis-point hike at the U.S. central bank’s June meeting, despite Fed chief Jerome Powell’s ruling that out.

Under Armour Inc slumped 23.8% after the sportswear maker forecast downbeat fiscal 2023 profit. Shares of rival Nike Inc also slipped.

Coinbase Global Inc dropped 9% on Friday to the lowest level since the cryptocurrency exchange’s 2021 stock market debut.

Volume on U.S. exchanges was 13.49 billion shares, compared with the 12.10 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 2.49-to-1 ratio; on Nasdaq, a 3.04-to-1 ratio favored decliners. The S&P 500 posted one new 52-week high and 63 new lows; the Nasdaq Composite recorded 15 new highs and 799 new lows.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 62.89 points, or 0.3%, at 20,633.28, its lowest closing level since Jan. 27. For the week, the index was down 0.6%.

E-commerce giant Shopify Inc fell 8.2%, adding to its sharp decline on Thursday when it reported results that missed estimates, while the technology sector ended 2% lower.

Consumer discretionary shares also lost ground, falling 0.8%. In contrast, energy ended with a modest gain, advancing 0.2% as oil prices climbed.

The big event next week will be the release of U.S. inflation data for last month.

“Probably the single biggest factor that could help break the fever in markets would be a calming of inflation. Next Wednesday’s U.S. CPI release for April thus looms extraordinarily large,” said Power.

“It just happens to have a few factors leaning in its favour, as the early read on both gasoline and used car prices were lower in the month—and, of course, these two items have been two of the leading causes of the inflation wildness of the past year. However, even with those two large helping hands, the headline number is expected to still hold above 8% y/y while core is likely to remain north of 6%,” he added.

With files from Reuters

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