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U.S. stock market futures indicated a stagnant open Friday after a rally Thursday.

Angela Weiss / AFP via Getty Images

U.S. stocks’ recent rebound appeared to have taken a pause on Friday, as major indexes were little changed. Elsewhere, bond yields continued to climb and cryptocurrencies sold off.

By afternoon, the Dow Jones Industrial Average was nearly unchanged, after the benchmark rallied 506 points on Thursday. The S&P 500 was also hovering around the flatline, while the Nasdaq Composite declined 0.2%.

“Monday’s declines were overdone and we’re inclined to think the two days bounce back is equally overdone,” wrote Tom Essaye, founder of Sevens Report Research.  

U.S. indexes have taken a more-than-3% round trip this week, after a Monday-Tuesday selloff as investors grappled with uncertainty about China Evergrande Group, Federal Reserve policy, and more.

U.S. Treasury bond yields are surging as global demand seems to be down for the moment. Global bond investors often pile into higher yielding U.S. debt when yields around the globe remain low, sending the price of U.S. debt up and yields down. That trade has reversed of late.

The yield on 10-year note climbed to as high as 1.46% Friday—its highest since July, but still well off the 1.75% peak from March 2021. The yield was hovering around 1.32% earlier this week. This comes after the yield on the U.K. 10-year Gilt has risen to 0.84%, after hovering around 0.7% to start the week. The rise makes U.S. debt slightly less attractive and was spurred by the Bank of England’s indication that it may hike interest rates as soon as the first quarter of 2022.

“The hawkish Bank of England meeting was the catalyst for the move higher in yields and we know that because 10-year GILT yields surged and pulled Treasury yields higher,” Essaye said.

Surging long-term bond yields put an outsized dent into valuations for growth companies because those firms are valued on a relatively long-term basis. Not only was the technology-heavy Nasdaq falling, but the Russell 2000 Growth Index was down 0.3%.

Still, the move down in growth stocks was minor. One factor investors will watch next is “the speed with which rates rise,” said Hank Smith, head of investment strategy at Haverford Trust. “If that 10 year hits 2% by year-end, either the economy better be booming like it was in the second quarter or the equity markets are not going to take that very well.” 

Although the major indexes were down, it wasn’t all bad for the stock market, as many sectors were seeing gains. The Invesco S&P 500 Equal Weight Exchange-Traded Fund (RSP), which reflects the breadth of stocks rising or falling, was rising 0.1%.

Elsewhere, China captured attention once again on Friday, and not just for the drama at China Evergrande. The country’s regulators released a statement saying that cryptocurrency transactions are illegal and should be banned.

“China ruling crypto transactions illegal would be disastrous for the cryptocurrency sector,” writes George Monaghan, an analyst at GlobalData. “Being excluded from the world’s largest market is terrible for any product, and this is the strongest demonstration yet of China’s anti-crypto sentiment.”

The price of Bitcoin dropped close to 6%, to around $41,500. Ethereum and Litecoin each sold off about 9%.

As for China Evergrande (3333.H.K.), the stock dropped 11.6% in Hong Kong as reports said that the company had failed to make an $83 million interest payment on an offshore bond denominated in dollars. Markets have largely pushed aside Evergrande concerns from earlier in the week, as contagion risk appears to be manageable despite indications that China was preparing for the group’s eventual collapse.

“The Chinese government is sensitive to the need to avoid wider financial risks, and would not allow the Evergrande situation to develop into a Lehman-like scenario,” writes Seema chief strategist for Principal Global Investors .

Shares in Evergrande’s electric vehicle venture, Evergrande New Energy Auto (0708.H.K.) dropped 23.4% amid reports that it had fallen behind on payments to workers and suppliers.

Overseas, Tokyo’s Nikkei 225 rose 2.1% as Japanese traders returned from holiday and welcomed upbeat inflation data. Germany’s DAX fell 0.7%, as the country heads into a federal election over the weekend that will replace longtime Chancellor Angela Merkel.

Here are seven stocks on the move Friday:

Nike (NKE) dropped 6.3% after its earnings topped estimates but sales fell short of targets. Nike also cut its guidance, citing supply-chain problems.

Cloudflare (NET) fell 4.3% after getting cut to Perform from Outperform at Oppenheimer.

Roku (ROKU) declined 4.3% after getting downgraded to Equal Weight from Overweight at Wells Fargo. The stock was upgraded to Buy from Neutral at Guggenheim on Thursday.

Coinbase (COIN) lost 1.8% after China said all crypto transactions would be illegal.

Micron Technology (MU) fell 0.1% after JPMorgan cut its price target to $100 from $140.

AstraZeneca (AZN) rose 1.4% after positive phase-three trial results for a cancer treatment developed with Merck (MRK), which rose 1%.

Write to Nicholas Jasinski at nicholas.jasinski@barrons.com