Stocks climbed on Wednesday as Treasury yields retreated, ending a three-day losing streak for the Dow Jones Industrial Average. The pan-European Stoxx 600 dipped slightly, while Swiss drugmaker Sandoz saw a drop of around 17% on its first day of trading due to lower-than-expected valuation. The ADP reported that private payrolls grew only 89,000 in September, less than half of economists’ estimate of 160,000. Annual wage growth also slowed to 5.9%, marking the 12th consecutive monthly decline. In preparation for monthslong strikes by the United Auto Workers union, General Motors secured a new $6 billion line of credit, while Ford obtained a $4 billion line of credit in August.
Frontrunners to replace Kevin McCarthy as House Speaker include U.S. Representatives Jim Jordan and Steve Scalise. Bank of America sees this week’s jump in bond yields as a buying opportunity for long-term investors, claiming that bank stocks are trading at attractive levels. The positive movement in the market on Wednesday was a result of a brief reprieve from bad news and rising costs. The September payrolls report and the ISM nonmanufacturing index both indicate continuing growth in the U.S. economy. However, analysts remain cautious, as a broader rally may not occur until rates ease up without triggering a financial crisis or recession.
The rally in stocks and retreat in Treasury yields on Wednesday provided a temporary relief for investors from recent losses. The Dow Jones Industrial Average broke its three-day losing streak, while the S&P 500 and Nasdaq Composite also saw gains. Key factors contributing to this positive movement included the higher-than-expected figure for job openings in August reported in the JOLTS report, which alleviated concerns about a tight labor market and potential rate hikes by the Federal Reserve in November. Additionally, falling oil prices eased inflationary worries. The ISM nonmanufacturing index for September indicated continued expansion of service activity in the U.S., satisfying proponents of a soft landing scenario. As a result, Treasury yields dropped, with the 10-year note seeing a decrease of nearly 7 basis points. However, analysts remain cautious about the sustainability of this rally, as rates easing without triggering a financial crisis or recession is necessary for broader market participation.
