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Yields fall, stocks jump after Fed official comments; oil eases

Published 10/09/2023, 10:26 PM
Updated 10/10/2023, 12:27 PM
© Reuters. FILE PHOTO: A woman walks past a man examining an electronic board showing Japan's Nikkei average and stock quotations outside a brokerage, in Tokyo, Japan, March 20, 2023. REUTERS/Androniki Christodoulou/File Photo

By Caroline Valetkevitch

NEW YORK (Reuters) -Global stock indexes advanced while Treasury yields slid on Tuesday as Federal Reserve officials suggested there may be no need for further interest rate hikes in the near term, and oil prices eased a day after gaining sharply on violence in Israel.

The Nasdaq and S&P 500 were up more than 1% by midday on Wall Street.

Atlanta Fed Bank President Raphael Bostic on Tuesday said the U.S. central bank does not need to raise rates any further, and sees no recession ahead.

Late on Monday, top-ranking Fed officials indicated that rising yields on long-term U.S. Treasury bonds, which directly influence financing costs for households and businesses, could keep the Fed from further increases in its short-term policy rate.

U.S. Treasury yields fell on the comments but also partly in reaction to continuing violence in the Middle East.

Cash Treasury markets had been closed for the Columbus Day U.S. holiday on Monday, so Tuesday morning was traders' first chance to react to Palestinian militants' surprise attack on Israel over the weekend as well as Fed officials' overnight comments.

On Tuesday, Israel hit the Gaza Strip with the fiercest air strikes in its 75-year conflict with the Palestinians, despite a threat from Hamas militants to execute a captive for each home hit.

Benchmark 10-year yields were on track for their largest daily drop since July, while those on the two-year were on pace for the biggest daily decline since late August. In late morning trading, U.S. 10-year yields were last down 10.6 basis points (bps) at 4.676%.

"We had dovish statements yesterday by Fed officials and then you have flight to safety here from the tragic events in Israel," said Stan Shipley, managing director and macro research analyst at Evercore ISI in New York.

The Dow Jones Industrial Average rose 244.43 points, or 0.73%, to 33,849.08; the S&P 500 gained 46.37 points, or 1.07%, to 4,382.03; and the Nasdaq Composite added 166.88 points, or 1.24%, to 13,651.12.

The pan-European STOXX 600 index rose 2.00% and MSCI's gauge of stocks across the globe gained 1.42%, on track for a fifth straight day of gains.

U.S. crude recently fell 0.81% to $85.68 per barrel and Brent was at $87.42, down 0.83% on the day.

Israeli markets and the shares of companies exposed to Israel have been hit hard. Israel's shekel extended losses on Tuesday after hitting a near-eight year low against the dollar the day before.

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 10, 2022.  REUTERS/Brendan McDermid/File Photo

The U.S. dollar index was down 0.2%, while the euro was up 0.4% at $1.0608.

In Asian markets, China's largest private property developer Country Garden Holdings warned that it might not be able to meet all of its offshore payment obligations when due or within the relevant grace periods.

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