U.S. Stocks Close Mostly Higher As Treasury Yields Pull Back Off 16-Year Highs

After turning in a lackluster performance early in the session, stocks moved mostly higher over the course of the trading day on Wednesday. The major averages all moved to the upside on the day, bouncing off their lowest closing levels in four months.

The major averages all finished the day firmly positive, with the tech-heavy Nasdaq leading the way higher. The Nasdaq jumped 176.54 points or 1.4 percent to 13,236.01, the S&P 500 advanced 34.30 points or 0.8 percent to 4,263.75 and the Dow rose 127.17 points or 0.4 percent to 33,129.55.

Trading on Wall Street was largely driven in reaction to activity in the bond market, with treasury yields fluctuating over the course of the session.

The higher close by stocks came as yields finished the day firmly in negative territory, giving back ground after reaching their highest levels in sixteen years.

Treasury yields closed lower following the release of a report from payroll processor ADP showing private sector job growth slowed by much more than expected in the month of September.

ADP said private sector employment rose by 89,000 jobs in September after climbing by an upwardly revised 180,000 jobs in August.

Economists had expected private sector employment to advance by 153,000 jobs compared to the addition of 177,000 jobs originally reported for the previous month.

The increase in September reflected the slowest pace of job growth since January 2021, when private employers shed jobs.

Jeffrey Roach, Chief Economist for LPL Financial, said a cooling labor market will take pressure off the Federal Reserve, but urged traders to proceed with caution ahead of the Labor Department’s more closely watched report on Friday.

Economists expect employment to increase by 170,000 jobs in September after climbing by 187,000 jobs in August, while the unemployment rate is expected to edge down to 3.7 percent from 3.8 percent.

The Institute for Supply Management released a separate report showing a modest slowdown in the pace of growth in U.S. service sector activity in the month of September.

The ISM said its services PMI edged down to 53.6 in September from 54.5 in August, although a reading above 50 still indicates growth. The modest decrease matched economist estimates.

Sector News

Airline stocks moved sharply higher over the course of the session, with the NYSE Arca Airline Index soaring by 2.7 percent after ending the previous session at a nine-month closing low.

Significant strength also emerged among housing stocks, as reflected by the 1.6 percent gain posted by the Philadelphia Housing Sector Index. The index bounced off its lowest closing level in almost four months.

Software and semiconductor stocks also showed strong moves to the upside as the day progressed, contributing to the surge by the tech-heavy Nasdaq.

While commercial real estate and retail stocks also moved notably higher, substantial weakness remained visible among energy stocks amid a steep drop by the price of crude oil.

With crude for November delivery plummeting $5.01 to $84.22 a barrel, the Philadelphia Oil Service Index plunged by 4.5 percent and the NYSE Arca Oil Index tumbled by 3.6 percent.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved notably lower during trading on Wednesday. Japan’s Nikkei 225 Index plummeted by 2.3 percent, while Hong Kong’s Hang Seng Index slid by 0.8 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index closed nearly unchanged and the U.K.’s FTSE 100 Index fell by 0.8 percent.

In the bond market, treasuries fluctuated over the course of the session but largely maintained a positive bias. Currently, the yield on the benchmark ten-year note, which moves opposite of its price, is down 5.2 basis points at 4.750 percent.

Looking Ahead

A report on weekly jobless claims may attract some attention on Thursday, although activity may remain subdued ahead of the monthly jobs report on Friday.

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