Stocks were mixed on Friday as Treasury yields keep rising and touching multi-year highs.
The Dow Jones Industrial Average dropped 0.231%, while the S&P 500 edged down, falling 0.01%. The tech-heavy Nasdaq Composite gained 0.02%.
Stocks recovered from steeper losses after a report claimed that the U.S. and Iran are discussing a deal to end hostilities and gradually reopen the Strait of Hormuz.
Oil prices soared despite the report, especially considering that neither side wants to take the first step. Brent crude, the international benchmark, climbed more than 4% and topped $107.5 at 3:21 a.m. ET, while West Texas Intermediate, the U.S. benchmark, gained 3.37% and stood above $95 at the same time.
Elsewhere, yields keep climbing along with inflationary concerns and the selloff of U.S. debt. The 30-year Treasury yield hit 5.446%, the highest level since June 2004, while the benchmark 10-year note climbed to 5.15%, getting close to the level reached in July 2007.
In this context, the chance of a Federal Reserve rate hike before the end of the year now stands above 68% as several officials signaled their willingness to support one as inflationary concerns continue to mount.
The CME Group's FedWatch tool shows a significant increase compared to last week, when the figure clocked in at 55.4%. Should it effectively be conducted at the October meeting, the rate would increase to the 4%-4-25% range.
The latest Fed official to open the door to a hike was New York's John Williams. Speaking at the London Macro Policy Forum, Williams said investor sentiment shows that "it's likely that another rate hike may be appropriate by the end of the year."
"That seems to me a reasonable way of thinking about it. But we have to see. We're going to collect the data and do what we did between July and September," he added.
Federal Reserve Governor Michael Barr also said on Wednesday that "further policy adjustments are likely to be needed" to reduce price increases.
"Economic growth is strong and the labor market is solid, but inflation is above our 2 percent target and not clearly trending toward target in a timely way," he added. "Moreover, risks to achieving our inflation target have increased, while risks to the labor market have receded."
Elsewhere, Boston Federal Reserve President Susan Collins said she supported last week's rate hike and anticipated the potential needs for more moves of the kind.
In a LinkedIn post, Collins said she now sees "an increased likelihood of future scenarios in which inflation remains notably above 2 percent."
She went on to say that, on the flip side, "labor market conditions seem a bit stronger overall, and the unemployment rate remains low" even though "experiences vary considerably by place and sector."
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