Did Friday’s Bond Selloff Just Call the Market’s Bluff?

U.S. equities reversed sharply on Friday, May 15, with the S&P 500 closing down 1.24% at 7,408.50, the Nasdaq shedding 1.54% to 26,225.14, and the Dow dropping 537 points to 49,526.17 — pulling back from all-time highs set just 24 hours earlier. The Russell 2000 bore the heaviest damage, falling 2.10% to 2,803.07, signaling that risk appetite dried up fastest at the smaller-cap end of the market. Energy was the lone sector in the green, gaining 1.6% as Brent crude pushed above $107, while Materials and Utilities each lost more than 2% amid a bond market that refused to cooperate with the equity rally narrative.