By Chuck Mikolajczak and Johann M Cherian
NEW YORK, Oct 1 (Reuters) – U.S. stocks recovered from early losses and closed slightly higher on Thursday, with the S&P 500 index rebounding from a two-week low as the global bond sell-off reversed after sending U.S. Treasury yields to multi-decade highs.
Stocks “were under pressure in early trading as economic data continued to point to a strong economy with lingering price pressures fueling fears that inflation could ultimately force the Federal Reserve to become more aggressive with rate hikes.”
The Labor Department said initial weekly jobless claims fell to 197,000, below the 200,000 forecast by economists polled by Reuters. It is the latest in a series of reports this week indicating the jobs market was on solid footing, ahead of the government’s payrolls report released on Friday.
Treasury yields extended their gains, and the benchmark 10-year Treasury note hit a 24-year high, after closing September with its biggest quarterly gain since 1994, and pushed stocks lower after the Institute for Supply Management said its manufacturing PMI fell to 54.5 last month from 54.6 in August and showed a rise in input prices, increasing concerns about inflation.
REVERSE PLOT OF CASH RETURNS
But yields fell as buyers stepped in, and fell further after Fed Vice Chairman Philip Jefferson suggested the central bank might be patient before raising rates again, following a 25 basis point hike in September.
The two-year U.S. Treasury yield, which typically moves in lockstep with the Fed’s interest rate expectations, fell about 10 basis points and was poised for its biggest daily decline since August 2025.
“Even though valuations have fallen, the market is still not cheap, so I’m not pessimistic on the stock market. We can continue, but I expect more volatility in stocks and bonds,” said Scott Welch, chief investment officer at Certuity in Potomac, Maryland.
“Everyone is adjusting to a new normal. There’s nothing particularly scary about what’s happening in the markets right now; it’s just a little different than what people have been used to over the past few years, and it’s going to take some adjustment.”
The Dow Jones Industrial Average rose 20.69 points, or 0.04%, to 50,926.74, the S&P 500 gained 14.94 points, or 0.20%, to 7,666.48 and the Nasdaq Composite gained 10.53 points, or 0.04%, to 26,871.60.
THE ENERGY SECTOR LEADS THE GAINS
Oil prices also continued to fuel inflation fears. Brent crude stabilized above $4 a barrel after China suspended fuel exports, threatening to tighten markets further. Rising crude prices helped lift the S&P 500 energy index 1.9%, the best performer of the 11 major S&P sectors.
Gn bussni
