In a remarkable turn of events, the Dow Jones Industrial Average experienced a significant surge of over 550 points, while the S&P 500 approached its most substantial gain since May. The catalyst for this impressive rally was the abrupt decline in Treasury yields for the second consecutive day, which followed the Federal Reserve’s surprising decision to halt interest rate hikes.
The bond market’s volatility has been a prominent feature in recent weeks, with long-duration Treasury yields climbing to notable heights. However, the tide has now turned, with the 10-year rate plummeting by more than 12 basis points. This decline marks a stark departure from the relentless surge in yields, which had seen rates on the 10-year note surpass the 5% threshold for the first time since 2007.
This bullish performance in the equity markets reflects growing investor confidence in the Federal Reserve’s commitment to maintaining interest rates within the range of 5.25% to 5.50%. For the second consecutive meeting, the central bank refrained from raising rates, reinforcing the belief that the era of rate hikes may be behind us.
Investors are eagerly awaiting Friday’s jobs report, with expectations of 117,000 new positions added in October. Encouragingly, recent data showed a significant advancement in labor productivity, alleviating inflationary pressures in the face of a robust job market.
Here’s the closing bell snapshot of major US indexes as of 4:00 p.m.:
- S&P 500: 4,317.78, up 1.89%
- Dow Jones Industrial Average: 33,847.14, up 1.72% (+572.56 points)
- Nasdaq Composite: 13,294.19, up 1.78%
Other notable developments today include:
- A market analysis suggests a rare pattern that could signal double-digit gains in the coming year.
- Economist Nouriel Roubini warns of the potential for a US recession triggered by the Federal Reserve and conflicts in the Middle East.
- Societe Generale suggests that Fed meetings are not the primary driver of the bond market, highlighting two other influential factors.
- Steve Eisman remarks that Chairman Jerome Powell appears equally perplexed by the state of the economy.
- An intriguing chart suggests that the stock market may have recently hit its bottom, offering insights into future trends.
- Regardless of Japan’s actions, Goldman Sachs emphasizes that Treasury demand remains robust.
In the realm of commodities, bonds, and cryptocurrency:
- West Texas Intermediate crude oil increased by 2% to reach $82.36 a barrel.
- The international benchmark, Brent crude, rose by 2.4% to $86.69 a barrel.
- Gold edged up to $1,993 per ounce.
- The 10-year Treasury yield experienced a 12.2 basis point drop, settling at 4.667%.
- Bitcoin remained relatively stable at $34,862.8.
This remarkable day in the financial markets underscores the intricate interplay of factors that influence investors’ sentiments and economic outlook. As investors continue to monitor the evolving landscape, the Dow’s robust performance serves as a testament to the resilience and dynamism of the US stock market.
