U.S. stocks pared earlier declines Tuesday, with investors still keenly focused on movements in Treasury bond yields, following comments from San Francisco Fed President Mary Daly that suggested surging Treasury yields may negate the need for another rate hike.
Daly told the New York Economic Club Thursday that "we can hold interest rates steady and let the effects of policy continue to work" if the labor market continues to cool and inflation retreats to the central bank's preferred 2% target.
A pullback in Treasury yields yesterday, sparked by a weaker-than-expected reading for private sector hiring over the month of September from payroll processing group ADP, helped stocks on Wall Street book solid gains, with the S&P 500 rising more than 34 points, or 0.81% on the session and the Dow returning to positive territory for the year.
A big slump in global oil prices, which followed data from the Energy Department showing a pullback in gasoline demand, and a 5.2 million barrel increase in crude products, and sent Brent crude more than $5 a barrel lower on the session, added to the bullish tone.
WTI crude futures for November delivery were marked another $1.68 lower at $82.54 per barrel in overnight trading, while Brent contacts for December, the global pricing benchmark, fell $1.59 to $84.22 per barrel.
On Wall Street, focus turned gain to job market data, with the Bureau of Labor Statistics reporting its weekly estimate of new applications for unemployment benefits at 8:30 am Eastern time.
The BLS said 207,000 people filed applications for new jobless benefits over the week ending on September 30, a 2,000 person increase from the prior period but around 5,000 shy of the Street consensus forecast.
"Yesterday’s ADP report suggested the jobs market could be cooling. Today’s low weekly jobless claims total points in the opposite direction. Tomorrow’s monthly jobs report may break the tie, but as has been the case for months, clear-cut evidence of a labor market slowdown has been hard to come by," said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
Benchmark 10-year note yields, which slipped to 4.712% in overnight trading, were last up 1 basis points to 4.721% following the BLS release, while 2-year notes added 2 basis points to 5.029%. The U.S. dollar index, meanwhile, held at a near 10-month high of 106.350 against a basket of its global peers.
The market's key volatility gauge, the CBOE's VIX index, was also on the back foot, slipping 0.11% in late trading to around 18.56 points, down from the multi-month high of 19.95 points it reached earlier this week.
On Wall Street, the S&P 500, which is down 0.57% for the month, was marked 1 point, or 0.05% lower in late-day trading while the Dow Jones Industrial Average gained 20 points. The tech-focused Nasdaq was up 3 points, or 0.03%.
In Europe, the Stoxx 600 was marked 0.3% higher by the close of trading in Frankfurt trading while the FTSE 100 added 0.53% in London.
Overnight in Asia, the solid rally on Wall Street flowed-through to the Nikkei 225, which rebounded from a four-month low to rise 1.8% on the session.
The region-wide MSCI ex-Japan benchmark, meanwhile, ended 0.57% higher on the final day of China's Golden Week holiday celebrations.
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