(Bloomberg) -- The selloff in stocks and bonds got a reprieve Wednesday as traders parsed US data and increased bets that the Federal Reserve can refrain from further interest rate increases.
Equity gauges touched session highs in the final minutes of trading with the Nasdaq 100 rising after a final leg higher in the tech sector. Tesla Inc. was at the forefront of the advance in large-cap tech names that also included Microsoft Corp., Amazon.com Inc. and Apple Inc. The S&P 500 rose to close around 4,264, above a key level that would have signaled more pain ahead according to technical analysts.
Read more: S&P 500 Faces Technical Make-or-Break Moment at the 4,200 Line
Ten-year Treasury yields ended the day lower after the rate on the benchmark touched a high of 4.88% during Asian trading hours. Traders trimmed wagers on a rate increase for this year after Wednesday's data suggested demand in several industries is slowing, countering a Tuesday readout.
US companies added the fewest number of jobs since the start of 2021 in September, according to a survey from the ADP Research Institute in collaboration with Stanford Digital Economy Lab. A separate report from the Institute for Supply Management showed the services sector also pulled back modestly last month to the lowest level this year.
“Stock investors have been hoping the labor market will loosen up and give the Fed enough breathing room to dial down its hawkishness,” said Mike Loewengart, head of model portfolio construction at the Morgan Stanley Global Investment Office. “ADP isn't necessarily a reliable predictor of the government's monthly jobs data, but if Friday's report also shows the labor market is cooling, stock investors may worry a little less about indefinitely higher interest rates.”
The latest leg of the selloff had been fueled by Tuesday's better-than-expected US job data, as well as a slew of hawkish comments from Federal Reserve officials. As conviction grew that US interest rates could rise further from current 22-year highs, 30-year yields touched 5% for the first time since 2007.
Wall Street had been saying longer term bonds at 5% yields were likely in the near-term. One-time bond king Bill Gross weighed in saying that the US 10-year at 5% would provide “decent” but not “great value” as inflation remains high.
Read more: Bond Markets a ‘Little Oversold' After ETF Pullout, Gross Says
Volatility could make another appearance when Friday's payrolls numbers hit. Before that traders can parse initial jobless claims data for signs that the economy is cooling and the Fed can pull back from its higher-for-longer messaging.
In commodities, crude plunged, with West Texas Intermediate dropping below $85 a barrel, while gold slid.
Key events this week:
- China has week-long holiday
- France industrial production, Thursday
- BOE Deputy Governor Ben Broadbent, Riksbank First Deputy Governor Anna Breman participate at panel discussion, Thursday
- US trade, initial jobless claims, Thursday
- San Francisco Fed President Mary Daly speaks at the Economic Club of New York, Thursday
- Germany factory orders, Friday
- US unemployment rate, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.8% as of 4 p.m. New York time
- The Nasdaq 100 rose 1.4%
- The Dow Jones Industrial Average rose 0.4%
- The MSCI World index rose 0.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.5% to $1.0515
- The British pound rose 0.6% to $1.2150
- The Japanese yen was little changed at 149.04 per dollar
Cryptocurrencies
- Bitcoin rose 0.8% to $27,617.31
- Ether fell 0.9% to $1,642.44
Bonds
- The yield on 10-year Treasuries declined seven basis points to 4.72%
- Germany's 10-year yield declined five basis points to 2.92%
- Britain's 10-year yield declined two basis points to 4.58%
Commodities
- West Texas Intermediate crude fell 5% to $84.73 a barrel
- Gold futures fell 0.2% to $1,838.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Cecile Gutscher, Macarena Muñoz, Sujata Rao, Michael Msika and Tatiana Darie.
More stories like this are available on bloomberg.com
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