Wall Street Rebounds After Treasury Yield Pullback

Market Wrap-Up: Wall Street Recovery Puts Focus on Yields and NFP

US stocks recovered from early losses on Thursday, with the S&P 500 rebounding from a two-week low as the global bond sell-off eased and Treasury yields retreated from multi-decade highs. The Dow Jones Industrial Average rose 0.04% to 50,926.74, while the S&P 500 gained 0.20% to 7,666.48 and the Nasdaq Composite added 0.04% to 26,871.60.

The benchmark 10-year US Treasury yield had earlier reached a 24-year high after recording its largest quarterly gain since 1994 in the third quarter. Yields later moved lower as buyers stepped in, while the two-year Treasury yield, which typically tracks expectations for Federal Reserve policy, fell by about 10 basis points.

US economic data continued to point to a resilient economy. Initial jobless claims fell to 197,000, below the 200,000 forecast from economists polled by Reuters. Meanwhile, the ISM manufacturing PMI eased to 54.5 in September from 54.6 in August, while higher input prices added to concerns about persistent inflation.

Fed Vice Chair Philip Jefferson indicated that the central bank may be patient before raising rates again following its 25-basis-point hike in September. Minneapolis Fed President Neel Kashkari, however, said he expected additional rate increases would be needed to restrain the economy into 2027, while remaining uncertain about whether the next move should come this month.

Softer-than-expected US inflation data released on Wednesday further reduced expectations for an October rate increase. By Thursday, markets were pricing in around a 25% chance of an October hike, down from nearly 70% a week earlier.

Oil prices rose sharply, with Brent crude settling 4.37% higher at $102.31 a barrel and WTI gaining 2.71% to $92.87. The move followed reports that Chinese refiners had suspended oil product exports beyond Hong Kong and Macau, while reports of additional US military deployments to the Middle East added to supply concerns.

Gold edged 0.2% higher to $4,165.29 an ounce, while US gold futures settled 0.4% higher at $4,202.30. Lower expectations for an October Fed rate hike supported bullion, although elevated Treasury yields and a stronger dollar limited further gains. Markets will now focus on Friday’s September US nonfarm payrolls report for further clues on the labour market and the Federal Reserve’s monetary policy outlook.

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Gold:

Key takeaway:

• Lower rate-hike expectations provided support for precious metals.
• Higher Treasury yields and dollar strength continued to limit upside.

Technical Outlook:

• Daily Bias: Neutral
• Support: 4,111
• Resistance: 4,220

WTI:

Key takeaway:

• China’s fuel export suspension added to concerns over already tight global fuel markets.
• Middle East developments kept supply risks in focus.

Technical Outlook:

• Daily Bias: Bullish
• Support: 90.49
• Resistance: 93.68

Dow Jones:

Key takeaway:

• Falling Treasury yields helped ease pressure on equities.
• Energy stocks led sector gains, while technology shares also advanced.

Technical Outlook:

• Daily Bias: Bullish
• Support: 50,790
• Resistance: 51,189

Calendar Watch:

• Nonfarm Payrolls: Shows the pace of US job creation and provides a key signal on labour-market strength.
• Unemployment Rate: Indicates the health of the US labour market and employment conditions.
• Average Hourly Earnings: Tracks wage growth and provides a signal on potential inflationary pressure.
• Factory Orders: Shows demand for manufactured goods and the health of US manufacturing activity.

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