Stocks Rebound, Tech Shines As Bond Yields Relax, Oil Tumbles: What's Driving Markets Wednesday?

Risk sentiment rebounded during midday Wednesday trading in New York as stocks surged, driven by a retreat in Treasury yields after several sessions of substantial surges.

The ADP National Employment Report, which fell short of expectations (89,000 vs. 153,000), provided a welcome respite, alleviating pressure on bond rates.

Additionally, a significant drop in gasoline demand in the U.S. last week acted as a substantial deterrent to oil prices, which tumbled by 4.5%, weighing down energy stocks.

Services sector activity moderated its pace of growth in September, in line with expectations, as evidenced by the latest ISM Services PMI readout.

Cues From Wednesday’s Trading:

The S&P 500 was 0.6% higher, on track for its best session since Sept. 14, while the Nasdaq 100 index rallied by 1.1%, eyeing its most robust daily performance since Sept. 11.

Simultaneously, the Dow Jones inched up by 0.3%, and small-cap stocks in the Russell 2000 posted a marginal 0.1% increase.

US Index Performance On Wednesday

Wednesday Trading In Major US Equity ETFs

• The SPDR S&P 500 ETF Trust SPY was 0.5% higher to $423.55.
• The SPDR Dow Jones Industrial Average ETF DIA rose 0.2% to $330.55. 
• The Invesco QQQ Trust QQQ rose 1.1% to $358.65, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Energy Select Sector SPDR Fund XLE was the underperformer for the second day in a row, down by 3%.
• The Consumer Discretionary Select Sector SPDR Fund XLY rose the most, up 1.6% for the day.

Analyst Color:

“With a market keenly focused on the path of interest rates, any data release that points to the possibility of a stronger wage environment is cause for concern to a market that is anxiously deciphering when — and hopefully ‘if’ — the Fed is near the end of its intense rate hiking campaign,” said LPL Financial Chief Global Strategist Quincy Krosby.

“Friday’s payroll data should help clarify if the labor market is as strong as the JOLTS report implies, because at this stage of the Fed’s ‘last mile’ to untangle the remaining ‘sticky’ inflation, a stronger than expected report will be the last thing the Fed wants to see, not to mention financial markets,” he added.

Congressional turmoil also seems to be getting on some nerves. Jamie Cox, managing partner at Harris Financial Group, said: “Investors are sick and tired of being jerked around with out-of-control spending, the inability to govern, and the constant dragging of markets to the edge of economic calamity with shutdowns and debt ceiling nonsense.”

Stocks In Focus:

• Tesla Inc. TSLA surged by 4.3%, in stark contrast to Detroit-based automakers General Motors Co. GM, Stellantis N.V. STLA, and Ford Motor Co. F, all of which saw declines amid the ongoing UAW strike.
• SolarEdge Technologies, Inc. SEDG rose 4.2%, on track for its best session since the end of June, aided by a slowdown in Treasury yields.
• Marathon Oil Corp. MRO stumbled 4.8%, hit by the selloff in oil prices. Industry peers including Phillips 66 PSX and Devon Energy Corp. DVN were among the worst performing stocks in the S&P 500 Index.
• Apple, Inc. AAPL rose 0.4% despite KeyBanc Capital Markets analyst Brandon Nispel downgrading the stock from Overweight to Sector Weight.
• Palantir Technologies, Inc. PLTR climbed over 4% after the data analytics company announced a collaboration with PwC that will combine Palantir's latest AI capabilities with PwC's industry experience to help clients realize value with data and AI-enabled operations.
• Rivian Automotive Inc. RIVN rose nearly 7% on positive third-quarter deliveries.
• Acuity Brands, Inc. AYI rose 7% after beating on a strong earnings report. AngioDynamics, Inc. ANGO Helen of Troy Limited HELE and Tilray Brands, Inc. TLRY fell after missing estimates.

Commodities, Bonds, Other Global Equity Markets:

Crude oil tanked 4.7%, with a barrel of WTI-grade crude trading at $84. The United States Oil Fund ETF USO was 4.8% lower to $76.  

Treasury yields were sharply lower, with the 10-year yield down 6 basis points to 4.73% and the two-year yield down by 9 basis points to 5.06%. The iShares 20+ Year Treasury Bond ETF TLT was 1.2% higher for the day. 

The dollar slightly fell, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, down 0.4%. The EUR/USD pair, which is tracked by the Invesco CurrencyShares Euro Currency Trust FXE, was 0.4% higher to 1.0511.

European equity indices had a mixed session. The SPDR DJ Euro STOXX 50 ETF  FEZ rose 0.8%. 

Gold edged 0.1% down to $1,820/oz, while silver fell 0.9% to $20.98. Bitcoin BTC/USD was 0.4% higher to $27,517.

Staff writer Piero Cingari updated this report midday Wednesday. 

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