Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. Reuters / BRENDAN MCDERMID

The S&P 500 and the Dow rose in choppy trading on Friday, boosted by a jump in banking stocks at the end of a volatile week marked by concerns around aggressive moves by the U.S. Federal Reserve to tame inflation.

Rate-sensitive lenders JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc and Goldman Sachs Group Inc gained between 1.5% and 2.4% in mid-day trading.

"It might be the fact that the 10-year bond interest rate is hitting the highest level it's been at since March of 2019," said Randy Frederick, managing director, trading and derivatives at Schwab Center for Financial Research.

The benchmark U.S. Treasury 10-year yield hit a three-year high above 2.7% on bets of a more hawkish Fed. [US/]

"The market has been down quite a bit. There's always going to be a price at some point where people are going to step in and think things are cheap and they might buy ... perhaps a 52-week low was enough to entice some people into the financial sector," Frederick said.

The banking index is still headed for a weekly drop after hitting a more than one-year low in the previous session.

Big U.S. banks, which kick off the first-quarter results season next week, are expected to show a sharp decline in earnings from a year earlier, when they benefited from exceptionally strong dealmaking and trading, and funds set aside for loan losses being released.

The S&P 500 and the Nasdaq were set to end the week lower, with the tech-heavy Nasdaq the worst hit after comments from Fed officials raised concerns about rapid rate hikes causing an economic slowdown.

Shares in Tesla Inc, Nvidia Corp and Alphabet Inc fell between 0.8% and 3.0%, with the megacap stocks set to extend this week's decline as the surge in treasury yields weighed.

The NYSE FANG+TM index, which includes Inc and Apple Inc, and semiconductor stocks have shed 4.4% and 6.6% respectively, so far this week.

Meanwhile, utilities and healthcare stocks briefly touched all-time highs.

While markets have rebounded significantly since the February lows hit in the wake of the Ukraine war, volatility gauges picked up this week as fresh sanctions against Russia also kept investors on edge.

The European Union formally adopted its fifth package of sanctions against Russia since its invasion of Ukraine, including bans on the import of coal, wood, chemicals and other products.

At 12:29 a.m. ET, the Dow Jones Industrial Average was up 317.38 points, or 0.92%, at 34,900.95, the S&P 500 was up 19.10 points, or 0.42%, at 4,519.31, and the Nasdaq Composite was down 33.63 points, or 0.24%, at 13,863.67.

Robinhood Markets Inc fell 6.5% after a report said Goldman Sachs downgraded the online brokerage, while Kroger Co jumped 3.0% on a ratings upgrade.

Advancing issues outnumbered decliners for a 1.47-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.00-to-1 ratio on the Nasdaq.

The S&P index recorded 52 new 52-week highs and two new lows, while the Nasdaq recorded 42 new highs and 142 new lows.