The yield on the 10-year Treasury rose to 1.46 per cent from 1.44 per cent late Tuesday, when it fell from 1.52 per cent.
Some better-than-expected data on the economy helped. A report from the Institute for Supply Management showed that growth in the US manufacturing sector accelerated a touch faster last month than economists expected.
A separate report from payroll processor ADP said that non-government employers hired more people in November than economists expected. That could raise expectations for Friday’s more comprehensive jobs report from the US government, though the ADP report doesn’t have a perfect track record predicting it.
A stronger economy would burn more fuel, and crude oil prices regained some of their sharp recent losses. Benchmark US crude rose 2.1 per cent to $US67.58 per barrel after briefly dropping below $US65 the day before. Brent crude, the international standard, rose 2.3 per cent.
That helped power energy stocks to a 2.2 per cent gain. Exxon Mobil climbed 2.5 per cent, and Marathon Petroleum spurted 3.9 per cent higher.
Vertex Pharmaceuticals rallied 7.8 per cent for the biggest individual gain in the S&P 500 after it reported encouraging data from a study of its investigational treatment for kidney disease. It led a widespread rally where nearly 90 per cent of stocks in the S&P 500 climbed.
Stocks also rose across Europe and Asia amid the continuing uncertainty about how powerful omicron’s punch will be.
Japan’s Nikkei 225 rose 0.4 per cent even as the country further tightened restrictions by asking international airlines to stop taking new reservations for all flights heading there until the end of the year.
South Korea’s Kospi jumped 2.1 per cent, while Germany’s DAX returned 2.5 per cent.
A measure of fear on Wall Street also eased, falling more than 15 per cent. But the VIX, which shows how worried investors are about upcoming drops for the S&P 500, is still well above where it was before omicron walloped markets worldwide after Thanksgiving.
The possibility of less help for markets from the Fed continues to hang over Wall Street. Chair Jerome Powell said Tuesday the central bank will consider an earlier halt to its monthly purchases of bonds, which are meant to goose the economy by keeping rates low for mortgages and other long-term loans.
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That would open the door for the Fed to raise short-term interest rates, diluting one of the main reasons for the S&P 500’s more than doubling since late March 2020. Low rates encourage investors to pay higher prices for stocks and have helped deflect criticism that the market had become too expensive. So a faster ramp up in short-term rates threatens stocks, but analysts say it could also be an encouraging signal about the Fed’s confidence in the economy’s strength.
Analysts also warn that the market is likely to remain jumpy until more clarity arrives on omicron’s ultimate impact. With no answer yet on the effectiveness of vaccines against the variant, it’s only a guess on whether governments will reinstate tough restrictions, people will be scared away from businesses or inflation will worsen.
AP
