By Joy Wiltermuth and Mark DeCambre
Natural-gas futures fall more than 10% as Russia vows to boost supplies to ease European shortages
U.S. stock benchmarks scored a turnaround Wednesday, ending higher for a second day, as technology stocks found a footing and signs of progress emerged in Washington on the debt ceiling debate.
Investors also have been fixated on bond yields, with the 10-year Treasury note near 1.5% on fears about inflation, higher energy costs and the likelihood of tighter monetary policy from the Federal Reserve.
How did stock indexes do?
On Tuesday, the Dow Jones Industrial Average rose 312 points, or 0.92%, to 34315, the S&P 500 increased 45 points, or 1.05%, to 4346, and the Nasdaq Composite gained 178 points, or 1.25%, to 14434.
What drove the market?
U.S. stocks staged a turnaround Wednesday, after trading lower early in the session, as investors wrestled with relatively upbeat jobs data, volatility in technology stocks and elevated 10-year Treasury yields.
"At 1.5%, people start to sit up and take notice," said Robert Pavlik, a senior portfolio manager at Dakota Wealth Management, about the 10-year Treasury rate's recent sharp rise, in a phone interview.
The 10-year Treasury note BX:TMUBMUSD10Y pulled back to 1.524% Wednesday after briefly climbing intraday to about 1.58%, its highest since June.
"But it's really a continuation of the unsettling news around interest rates and higher energy prices, and what that's going to mean for certain groups of stocks, including the tech space," Pavlik said.
"Some tech names are in the process of finding a bottom, which is the first step in turning this around," he said, adding that the S&P 500 might still need to decline 1% to 1.5% before finding a bottom, but that the Technology Select Sector SPDR ETF (XLK) could need to fall even further.
Technology stocks have been under pressure lately, as rising yields can be a negative for shares of fast-growing companies as they make those future cash flows appear less valuable.
Read:Analyst forecasts tech stock rebound of at least 10% and says rate fears will soon pass
On the debt-ceiling front, President Joe Biden kept pressure on lawmakers to raise the U.S. borrowing limit, telling CEO of top U.S. businesses on Wednesday that an American default would "lead to self-inflicted wounds that risk the market tanking and wiping out retirement savings and costing jobs."
Meanwhile, Senate Minority Leader Mitch McConnell on Wednesday made a new offer to the Democratic-run Senate as lawmakers struggled to end a standoff over the federal borrowing limit.
Read: What will the Fed will do if the government hits the debt ceiling?
Energy stocks have received a boost from higher crude oil and natural gas prices recently as shortages disrupt economies in Europe and China. But Natural-gas futures fell 10% Wednesday, after Russian President Vladimir Putin said his country would boost supplies of the fuel to ease European shortages, a day after prices settled at their highest level since late 2008. U.S. oil futures also pulled back modestly, after posting their highest close in about seven years.
Some investors also were seeking haven in the U.S. dollar, which rose 0.3% on Wednesday, as measured by the ICE U.S. Dollar Index.
In U.S. economic data, a report from Automatic Data Processing Inc. showed that 568,000 private-sector jobs were created in September, outpacing estimates from The Wall Street Journal for 425,000. However, a reading for August was reduced to 340,000 from 374,000.
Still, the labor-market report, coming ahead of the more closely followed nonfarm payrolls report due Friday from the Labor Department, may be sufficient to meet the Federal Reserve's criteria for "substantial further progress" as the central bank looks ready to taper its monthly purchases of Treasurys and mortgage-backed securities as the economy recovers from the COVID-19 pandemic.
Mike Loewengart, managing director at E-Trade Financial, told MarketWatch via email that "given the backdrop of uncertainty we're facing on a number of fronts, investors could be reading into the potential effect that a positive jobs read will have on Fed policy, as opposed to what it means for where we stand in terms of economic recovery."
"Bottom line is there are a number of factors likely contributing to market moves in this relatively volatile environment. So the ADP read is really just one piece of the puzzle, and historically hasn't always stacked up as a proxy for the full jobs report we'll get later in the week," Loewengart said.
Economists expect the economy added a net 500,000 jobs in September, up from the disappointing 235,000 jobs added in August, according to a Wall Street Journal poll. The unemployment rate is expected to tick down to 5.1% from 5.2%.
Which companies were in focus?
How did other assets perform?
Barbara Kollmeyer contributed reporting
(END) Dow Jones Newswires
October 06, 2021 16:55 ET (20:55 GMT)
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