US Stocks Rebound as Treasury Yields Pull Back from Multi-Decade Highs
US stocks rebounded on Thursday after initially coming under pressure due to strong economic data and rising Treasury yields. The Dow Jones Industrial Average added 29.84 points, or 0.06%, to finish at 50,935.89, while the S&P 500 gained 0.23% to 7,668.82.
The recovery came after Treasury yields pulled back from multi-decade highs, with the 10-year yield falling by 6 basis points and the 30-year yield declining by 4 basis points. The two-year Treasury yield, which is sensitive to expectations for the federal funds rate, dropped nearly 10 basis points.
The decline in shorter-dated yields reflected changing expectations around Federal Reserve policy, with markets pricing a 28.2% probability of at least a 25-basis-point rate hike at the October meeting, down from 68.6% a week earlier. Fed Vice Chair Philip Jefferson indicated that the central bank could be patient before raising rates again after its 25-basis-point increase in September.
The rise in oil prices also remained a factor for investors, with Brent crude settling more than $4 higher after China suspended fuel exports and WTI crude gaining 1.6% to trade above $91 a barrel.