NEW YORK (AP) — U.S. stocks were steady Tuesday as falling oil prices released some of the pressure built up in the market.
The S&P 500 rose 0.8% in afternoon trading, recovering most of its losses from the previous day. As of 12:41 p.m. ET, the Dow Jones Industrial Average was up 96 points, or 0.2%, also close to the record set last week, and the Nasdaq Composite Index was up 1.2%.
Wall Street was firm, even as stock markets around the world fell on China’s frightening swings, as euphoria over the possibility of stimulus in the world’s second-largest economy gave way to disappointment. Stocks in Hong Kong fell 9.4%, the worst day since the 2008 global financial crisis.
Helping Wall Street was the collapse in oil prices. It has given back some of its big recent gains amid concerns that worsening tensions in the Middle East could eventually lead to disruptions to oil flows.
Brent crude oil, the international standard, fell 4.5% to $77.28 per barrel. Meanwhile, benchmark US crude oil fell 5.1% to $73.25 per barrel.
Pressure on the stock market from the bond market also leveled off slightly. U.S. Treasury yields held steady a day after hitting their highest levels since the summer.
The yield on the 10-year U.S. Treasury note fell to 4.02% from 4.03% late Monday. The two-year Treasury yield, which more closely reflects expectations about what the Federal Reserve will do with overnight interest rates, fell slightly to 3.96% from 3.99% as of late Monday, but remains below August. This is close to the highest level since then.
When Treasurys pay higher yields, investors are generally less willing to pay very high prices for stocks and other investments. And Treasury yields have soared in the last week following a series of reports suggesting the U.S. economy may be healthier than expected.
These reports, including last week’s report that U.S. employers are hiring much more strongly than expected, are raising hopes that the economy will avoid recession. But at the same time, traders are betting on expectations for how much the Fed will cut interest rates, given the Fed’s focus on keeping the economy strong as well as fighting high inflation. We are also forced to retreat little by little.
Traders, for example, have given up hope that the Federal Reserve will cut its key interest rate by a sharper 0.5 percentage point than usual at its next meeting. Instead, they are primarily betting on cuts of a quarter of a percentage point from their previous size, according to CME Group data. Some believe there is a small chance the Fed will keep its key interest rate unchanged in November.
story continues
On Wall Street, PepsiCo rose 0.7% after its most recent quarterly profit beat analysts’ expectations despite lower sales.
CEO Ramon Laguarta also said the company now expects “low single-digit” growth in a key measure of revenue this year, after previously expecting growth of about 4%. said. U.S. consumers continue to cut back on snack and beverage purchases after years of price increases.
DocuSign rose 7.9% after S&P Dow Jones Indices announced the electronic document signing company will be added to the S&P MidCap 400 Index. DocuSign will replace MDU Resources, which will be downgraded to the S&P Small Cap 600 after announcing last week that it would spin off its construction services subsidiary Everus Construction Group.
Wall Street’s losers are oil and gas companies, which have recouped some of their recent big gains from soaring oil prices. Chevron fell 1.9%, one of the main reasons why the Dow has lagged other indexes.
In overseas stock markets, trading resumed in mainland China after the National Day. Previously, indexes in Shanghai and Shenzhen had soared on hopes for stimulus from governments and central banks to support sluggish economic growth.
China’s Economic Planning Administration released details of its economic stimulus package on Tuesday, but refrained from making any large-scale spending plans. This led to a 9.4% decline in Hong Kong’s Hang Seng Index.
Shares in Shanghai, which had been closed due to Hong Kong’s rally last week, rose 4.6% as trading resumed.
Disappointment with China has had a global impact, driving down the stock prices of companies in Europe, the United States and elsewhere that have many operations in and around China. Estee Lauder, for example, fell 2.3% and Wynn Resorts fell 2%.
___
AP Business Writers Matt Ott, Elaine Kurtenbach and Zen Soo contributed.
