The week of August 17–21 exposed a sharp split across global markets: U.S. equities recovered on Friday but still finished lower over five sessions, while Asian and European benchmarks diverged widely. The S&P 500 fell 1.43%, the Nasdaq Composite declined 2.05% and the Russell 2000 slipped 1.65%, showing how higher bond yields and pressure on technology shares weighed on growth-sensitive assets.

U.S. Markets: Friday Rebound Fails to Repair the Week

Friday offered a meaningful recovery, with the Dow Jones Industrial Average rising 0.98%, the S&P 500 gaining 0.43%, the Nasdaq adding 0.43% and the Russell 2000 advancing 0.85%. Yet the five-day picture remained negative: the Dow fell 0.85%, the S&P 500 declined 1.43%, the Nasdaq lost 2.05% and the Russell 2000 slipped 1.65%. AP linked Friday’s rebound partly to stronger-than-expected Ross Stores earnings and firmer U.S. business-activity data, while Reuters identified rising long-term Treasury yields as a central pressure point. The 30-year Treasury yield reached its highest level since 2007, a backdrop particularly relevant for technology and AI-related valuations.

Volatility and the Dollar Signal a More Defensive Backdrop

The CBOE Volatility Index captured the week’s changing risk appetite. It climbed 6.60% on August 17 and 7.52% on August 20 before falling 5.50% on August 21, ending at 15.13. The swings indicate repeated increases in demand for short-term protection as yields and policy uncertainty unsettled equities, even though volatility eased into Friday’s rebound. The U.S. Dollar Index finished at 98.84, rising 0.04% Friday but falling 0.80% over five sessions, indicating that the week’s adjustment was not simply a one-way move into U.S. assets.

Europe and Asia: Divergence Defines the Week

European markets were mixed. The FTSE 100 rose 0.64% Friday and gained 0.62% over five sessions, while MSCI Europe advanced 0.48% Friday and 0.40% over five days. The DAX gained 0.59% Friday but fell 1.15% for the week; the CAC 40 rose 0.37% but declined 1.76%. Asia was more divided: the Hang Seng rose 1.21% Friday and 3.55% over five sessions, while the KOSPI gained 0.88% Friday but fell 0.93% over five days. The Shanghai Composite added 0.04% Friday but declined 0.56% over five sessions, while the Nikkei 225 fell 0.30% Friday and 4.63% for the week. South Korea’s weakness is notable because exports surged 56% year over year in the first 20 days of August, led by record semiconductor shipments, suggesting equity pressure reflected valuation and global rate concerns more than a collapse in the export cycle.

Israel: A Softer Weekly Decline Than Many Global Peers

Tel Aviv also ended Friday higher, with the TA-35 rising 0.39% to 4,171.90 and the TA-125 gaining 0.77% to 4,159.11. Over five sessions, however, the TA-35 declined 0.73% and the TA-125 fell 0.42%. The available index data do not identify a single sector as the decisive driver, so attributing the move specifically to banks, defense stocks or institutional selling would go beyond the evidence supplied. The relative performance nevertheless shows that Israeli equities absorbed global risk-off pressure with a smaller weekly decline than U.S. technology shares, Japan or France.

Looking Ahead: Rates and Earnings Return to Center Stage

The next week brings a sharper test of whether the pullback was mainly a valuation reset or a broader change in risk appetite. Markets will focus on Nvidia’s August 26 earnings and Federal Reserve Chair Kevin Warsh’s Jackson Hole appearance, while inflation and growth indicators will shape rate expectations. Reuters identified elevated long-term yields, semiconductor weakness and uncertainty over the Fed’s direction as key tests for the AI-led rally.