Wall Street gains as US Treasury yields ease

The S&P 500 and the Nasdaq have advanced as easing Treasury yields boosted megacaps while investors awaited developments on a US funding bill and inflation data this week to gauge the Federal Reserve’s policy outlook.

A pullback in the two- and 10-year Treasury yields provided some relief to megacap growth stocks including Apple, Nvidia, Meta Platforms and Alphabet, up between 0.2 per cent and 1.3 per cent.

In early trading on Wednesday, the Dow Jones Industrial Average was up 4.43 points, or 0.01 per cent, at 33,623.31, the S&P 500 was up 11.15 points, or 0.26 per cent, at 4,284.68, and the Nasdaq Composite was up 56.58 points, or 0.43 per cent, at 13,120.19.

“When the market declines rather rapidly and it has for quite some time, bargain hunters will step in and periodically buy things,” said Randy Frederick, managing director of trading and derivatives for Charles Schwab.

Energy led gains amongst the major S&P 500 sectors, advancing 1.2 per cent as crude prices rose above 1.0 per cent, while real estate added 0.5 per cent following a near 2.0 per cent drop on Tuesday.

All the three major stock indexes closed more than 1.0 per cent lower on Tuesday as 10-year Treasury yields held their multi-year highs, with investors wrestling with prospects for a long period of high interest rates and an economic fallout.

“The longer-term momentum is still positive even though we are in a period of short-term pullback and that’s driven by a lot of things – high interest rates, high crude oil prices and the prospect of a government shutdown at the end of this week,” Frederick added.

The S&P 500 and the Nasdaq are set for their worst monthly showing so far this year while all the three indexes including the Dow are eyeing their first quarterly decline in 2023.

For the rest of the week, investors will monitor second-quarter GDP and the monthly personal consumption expenditures price index, along with Federal Reserve chair Jerome Powell’s remarks.

On Wednesday’s data front, orders for long-lasting US manufactured goods unexpectedly rose in August.

Traders’ bets on the benchmark rate remaining unchanged in November and December stood at about 84 per cent and 62 per cent respectively, according to CME’s FedWatch tool.

Meanwhile, a 25-basis-point rate cut is being priced in as early as March, growing to more than 33 per cent in June and July.

Meanwhile, the US Senate on Tuesday took a step forward on a bipartisan bill to stop a government shutdown on Sunday while the House sought to push ahead with a Republican-backed measure.

The current partisan gridlock has begun to darken Wall Street’s view of US government credit.

Marriott International added 1.3 per cent after the hotel operator forecast two-year annualised global revenue per available room (RevPAR) growth of 3.0 per cent to 6.0 per cent by 2025.

Mattel rose 2.9 per cent after Morgan Stanley initiated coverage on shares of the maker of Uno playing cards with an “overweight” rating.

Advancing issues outnumbered decliners by a 4.07-to-1 ratio on the NYSE and a 3.26-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week high and 13 new lows while the Nasdaq recorded 12 new highs and 56 new lows.

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