By Yasin Ebrahim

Investing.com – The S&P 500 pared its losses Friday, as cyclical sectors continued to rack up gains as the reflation trade gathers pace in the wake of rising Treasury yields.

The fell 0.05%, the slipped 0.04%, or 14 points, the Nasdaq fell 0.27%.

“The reflation trade is reflating, as 10-year yields break through some initial resistance,” said Mark Luschini, chief Investment strategist at Janney Montgomery Scott  in a note. “Small-caps, value stocks, and banks/financials … continue to be powered by a strong correlation to trends on the Treasuries.”

Rising yields – supported by expectations for tighter Federal Reserve monetary policy has steadied fears about the economy at a time when concerns about Chinese real estate developer Evergrande continue to linger.  Evergrande had been scheduled to pay $84 million in coupon payment on Thursday. Bondholders remain awaiting this.

“Focus on the 10-year treasury … that’s a key indicator of a global economy that is doing well,” Darren Schuringa, CEO of ASYMmetric ETFs told investing.com earlier this week. “Longer-term, we need strengthening global GDP growth to sustain the rally [in equities].

Financials and energy were the largest gainers of the day. They are both benefitting from the ongoing rise in bank stocks.

Truist Financial Corp (NYSE) and Raymond James Financial (NYSE), Lincoln National (NYSE), were both up over 2%.

In tech, Facebook (NASDAQ:) continued to recover losses from earlier this week,  helping the broader tech sector pared some of its intraday losses.

Roku (NASDAQ:) slipped 2% after Wells Fargo downgraded the company to equal weight from overweight, and cut its price target on the stock to $388 from $450, citing expectation for slower revenue growth ahead.

Nike (NYSE:) cut its revenue forecast amid ongoing supply chain issues that led to a fiscal first-quarter revenue miss, sending the sportswear giant’s shares down 3%.

Wall Street believes the Nike stock market slump can be a buying opportunity.

Oppenheimer wrote in a note, “We expect supply chains issues to prove temporary and recommend clients utilize any related nearer term share price weakness as an opportunity for buying.”

In other news, cryptocurrency-related stocks were hurt by a further crackdown on crypto in China.

China’s central bank deemed all digital currency activities illegal and vowed to crack down on the market.

Robinhood Markets (NASDAQ:), Coinbase (NASDAQ:), Marathon Digital (NASDAQ:) were in the red.