US equities rebound to close higher as surging Treasury yields recede

On October 1, US equities managed to rebound and close higher despite surging Treasury yields, which had previously pushed them lower. The S&P 500 bounced from a two-week low, while the Dow Jones Industrial Average and Nasdaq Composite also showed gains. This turnaround came after economic data continued to signal a robust economy with persistent price pressures, fueling fears that inflation might force the Federal Reserve to become more aggressive with rate hikes.

Initial jobless claims fell to 197,000, below the 200,000 forecast, reinforcing the strength of the labor market. Meanwhile, Treasury yields saw a reversal, with the 10-year note hitting a 24-year high and investors stepping in, leading to a decrease in yields. Fed vice-chair Philip Jefferson hinted at the central bank's potential patience before further rate hikes, following a 25 basis point increase in September.

Despite the market's adjustment to a new normal, experts suggested that volatility could persist in both equities and bonds. Oil prices also contributed to inflation concerns, as China suspended fuel exports, tightening markets. Technology sectors showed resilience, with Accenture reporting full-year revenue growth above estimates.

Meanwhile, softer-than-expected inflation data in September further eased expectations of immediate Federal Reserve rate hikes. Minus 1.234-to-1 ratio on the NYSE and a 1.04-to-1 ratio on the Nasdaq indicated that advancing issues outnumbered decliners on US exchanges.