Wall Street is finding stability as the bond market eases its grip on stocks following signs of a slowdown in the US economy. The S&P 500 rebounded by 0.4% after a 1.4% drop that pushed it to its lowest level in four months. The Dow Jones Industrial Average also saw a slight increase of 5 points, while the Nasdaq composite rose by 1%. The bond market had been pressuring stocks with soaring Treasury yields, diverting investment away from stocks and increasing borrowing costs for corporations.
The 10-year Treasury yield, a key indicator in the bond market, decreased from its highest level since 2007, providing some relief to the stock market. Yields fell after mixed reports on the economy, particularly in relation to hiring. The ADP report showed that private employers added 89,000 jobs last month, significantly less than the expected 140,000. This slowdown in hiring is seen as positive news for stock investors, as it could reduce upward pressure on inflation and potentially lead to a more lenient monetary policy by the Federal Reserve, which has raised interest rates to their highest level in 17 years.
Additionally, Wall Street is grappling with the removal of Kevin McCarthy as speaker of the House of Representatives, which raises concerns about a potential government shutdown when the current funding extension expires. Although past shutdowns have not severely impacted financial markets, a prolonged shutdown could have negative effects on the US economy and increase the risk of recession. Despite these uncertainties, Big Tech stocks, such as Tesla and Microsoft, are helping to support the market, while oil and gas companies are facing losses due to declining crude oil prices. Asian stocks also experienced significant declines following Wall Street’s losses.
