On Wednesday, US stocks showed signs of improvement, while bond yields retreated from their recent highs reached on Tuesday. The Dow Jones Industrial Average saw a gain of over 100 points, and the Nasdaq Composite surged by more than 1%. These positive movements in the stock market coincided with a slight decline in the 10-year US Treasury yield, which had recently reached a 16-year high.
The trigger for this market activity was a report from ADP, released before the market opened, indicating a weakening labor market. ADP reported that private payrolls had increased by only 89,000 in September. This figure fell significantly below the Dow Jones estimate of 160,000 and was a decrease from the revised reading of 180,000 in August.
This data release was closely watched because it provides a glimpse into the labor market before the release of the nonfarm payroll report for September, scheduled for Friday. Investors consider this report crucial for understanding potential future monetary policy decisions by the Federal Reserve.
Dan North, a senior economist at Allianz Trade North America, commented on the ADP report, noting that while the ADP report is not usually given much weight, it could serve as an early indicator of a weaker-than-expected employment report.
Another factor influencing market dynamics was the decline in oil prices. JPMorgan analysts expressed concerns about demand reduction, and data revealed a drop in demand for gasoline in the US.
The outlook for equities remains uncertain on Wall Street, particularly after a challenging period of trading. Quincy Krosby, Chief Global Strategist at LPL, suggested that October, traditionally known for its volatility, could potentially transition into a more favorable market environment. Krosby pointed out that the recent sharp market decline had pushed it into a deeper oversold condition, making valuations more attractive.
Here’s a summary of the US market indexes at the close of trading on Wednesday:
- S&P 500: 4,263.68, up 0.81%
- Dow Jones Industrial Average: 33,129.55, up 0.39% (+127.17 points)
- Nasdaq Composite: 13,236.01, up 1.35%
In other significant developments:
- JPMorgan predicts that the turbulence in the stock market is not yet over.
- Kevin O’Leary dismisses the notion that institutional investors have a strong interest in Bitcoin.
- Home loan applications have reached their lowest level since 1996.
- Bill Gross advises against bonds and characterizes stocks as “clearly overvalued,” even after the recent market sell-off.
- The rapid rise in Treasury yields has had a significant impact on stocks, bonds, and the broader economy.
- Some indicators suggest that stocks may be on the verge of a relief rally following extreme oversold conditions.
In commodities, bonds, and cryptocurrencies:
- Oil prices experienced a drop, with West Texas Intermediate falling by 5% to $84.75 per barrel, and Brent crude, the international benchmark, declining by 5.11% to $86.27 per barrel.
- Gold witnessed a minor decrease of 0.15%, settling at $1,838.60 per ounce.
- The 10-year Treasury yield saw a seven-point decrease, hovering at around 4.72%.
- Bitcoin recorded a 1.67% increase, reaching $27,773.