Stock market news, U.S. stocks went up because Treasury yields stopped rising sharply and investors liked how the Bank of England suddenly changed its policy.
The S& P 500 gained about 2%, while the Dow Jones Industrial Average gained about 550 points or 1.9%.This week, both of these major averages hit new lows for 2022. About 2.1% of the Nasdaq Composite went up.
On the other hand, England’s central bank announced that it would temporarily buy long-term U.K. government bonds as an emergency measure to help keep its currency stable.
In a statement released Wednesday morning, BoE officials said, “There would be a material risk to the financial stability of the U.K. if dysfunction in this market continued or got worse.” “This would lead to an unwarranted tightening of credit conditions and a drop in the flow of credit to the real economy.”
Stock market news lives updates:
On Wednesday morning, investors were worried about big changes in the fixed income and currency markets. These investors were also worried about interest rates and a possible recession. On the bond side, the benchmark 10-year Treasury note, which is a key part of the economy, fell to 3.7% after rising above 4%. This is the biggest drop since 2009.
Nicholas Colas of DataTrek said in a morning note that the price volatility of long-term U.S. Treasury bonds is at statistically unusual levels right now, just like it was in June 2022. “Once yields stabilized, U.S. stocks hit rock bottom in that month.”
In the commodities market, oil had its biggest gain since July as US stocks went down. At $82.15 per barrel, West Texas Intermediate (WTI) crude oil finished the day up 4.6%.
On the business front, shares of Apple (AAPL) fell 1.3% after a report that the tech giant is dropping plans to make more of its new iPhones this year because demand hasn’t been as high as expected.
Analysts at Morgan Stanley were skeptical about the news. They said that the reports were “more bark than bite” and pointed out that “the upside from better-than-expected demand for the iPhone 14 Pro/Pro Max is likely being offset by weaker initial demand for the iPhone 14/14 Plus,” which doesn’t mean that the company’s shipment forecasts for iPhones will go down.
Aside from that, shares of DocuSign (DOCU) went up 5% after the company said it plans to restructure and cut about 9% of its staff.
Stocks rise as Treasury yields fall and BoE pivots
On Wednesday, shares of Biogen (BIIB) went up by about 40% after a successful trial of its experimental Alzheimer’s drug. In a clinical trial, the news that the test slowed the progression of Alzheimer’s by 27% compared to a placebo also made shares of pharmaceutical companies like Eli Lilly (LLY) rise by more than 7%.
Some of the biggest names on Wall Street have become more pessimistic about stocks, pointing out the risk of a global recession at a time when central banks are acting in the most aggressive way they have in decades.
Strategists at BlackRock’s (BLK) Investment Institute said that policymakers were underestimating how bad things would have to get for inflation to go down quickly.
A team led by Jean Boivin said in a note earlier this week, “The markets haven’t priced that in yet, so we avoid most stocks.”
Goldman Sachs (GS), the best investment bank on Wall Street, changed its global allocation for the next three months so that it has less money in stocks. They did this because rising real yields are a headwind.
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