US stocks edge higher as bond yields retreat for now

US stocks saw a slight upward movement on Thursday as bond yields temporarily declined, offering investors a potentially attractive opportunity to lock in yields that have not been seen in decades, according to CFRA Research's Sam Stovall. Despite a mixed day where Wall Street stocks fluctuated in and out of negative territory, the broad-based S&P 500 managed to end the day higher, with a gain of 0.2%.

The retreat in bond yields came after they had reached multi-year peaks in recent weeks, causing concern over persistent inflation and the increasing debt burden on US government finances. These higher yields translate into costlier mortgages and other forms of credit, which could potentially impact the performance of the consumer-driven US economy.

European stocks, on the other hand, finished the day lower, with French and UK 10-year yields hitting their highest levels since the 2000s. Growing inflation fears also contributed to this downward trend. In Asia, Tokyo and Seoul stock markets experienced strong gains, driven by a positive earnings announcement from chipmaker Micron and other AI-related news.

Micron's record results provided a much-needed boost to investors concerned about the high sums invested in the AI sector and the potential returns they might see. Oil prices saw a sharp rise, despite indications of improved crude exports from the Middle East. However, markets remained cautious due to the potential escalation of the US-Iran conflict, as recent diplomatic efforts yielded no agreement.

Traders are now eagerly awaiting Friday's US jobs data to gauge whether the Federal Reserve will follow up last month's interest rate hike aimed at battling inflation with another round of tightening in October.