The Dow Jones Industrial Average broke a three-day losing streak Wednesday as Treasury yields pulled back from multiyear highs following the release of much weaker-than-expected jobs data.
The 30-stock index gained 127.17 points, or 0.39%, to close at 33,129.55. The S&P 500 added 0.81% and closed at 4,263.75. Meanwhile, the Nasdaq Composite gained 1.35% at 13,236.01.
Within the S&P 500, consumer discretionary was the best-performing sector, rising about 2%. Tesla and Norwegian Cruise Line led the sector gains, adding 5.9% and 3.8%, respectively.
Energy was the index’s worst-performing sector Wednesday as crude prices had their single largest day of losses back to September 2022. Devon Energy and Marathon Oil each fell roughly 5%, while SLB and Halliburton both dropped more than 4%.
Wednesday’s moves follow the release of new jobs data. ADP said 89,000 private payrolls were added last month. That’s well below a Dow Jones forecast of 160,000 and fewer than an upwardly revised 180,000 payroll additions from August.
Treasury yields pulled back slightly from their 2007-level highs on the data. The 10-year Treasury yield was last trading at 4.735%.
“Anytime you have big momentum in one direction, there’s going to be days where you get a little bit of reprieve and in this case, you get a reprieve in rates and equities. The broader trend is really the downside from here,” said Ross Mayfield, investment strategy analyst at Baird.
Higher interest rates have increased fears of a recession and have pushed mortgage rates near 8%. Consequently, mortgage demand fell to its lowest levels since 1996.
“The market is being dragged around by interest rates,” said Harris Financial Group managing partner Jamie Cox. “[We’re] seeing a divergence — a big difference — between fixed income and equities,” he added.
Investors remain on edge and are looking toward Friday’s release of September’s nonfarm payrolls data for more indications on the strength of the labor market.
The data comes on the back of a losing session on Wall Street after job openings data indicated the labor market is still strong and bond yields marched higher. The yields on the 10-year and 30-year Treasurys reached their highest levels since 2007. Meanwhile, the Dow notched its worst session since March and turned negative for the year.
“I don’t think you get a broader [rally] participation until rates ease up, and that’s only if rates ease without some sort of financial crisis or hard landing recession,” Mayfield said. “Every day that we’re this high on rates [and] every basis point deeper into restrictive territory, probably reduces the odds of a soft landing in 2024.”