Stocks reach 4-week highs as bond yields drop

STORY: U.S. stocks rallied on Wednesday as bond yields and oil prices fell, while investors awaited more clarity on the Federal Reserve’s plans to raise interest rates.

The Dow rose 1.4%. The S&P 500 gained more than 1.8%, while the tech-heavy Nasdaq ended more than 2% higher, snapping a seven-session losing streak.

The rebound in equities spurred investor optimism that the market’s sharp downturn since mid-August may have finally hit bottom.

But Michael Vogelzang, chief investment officer at CAPTRUST, said he was still positioning cautiously.

“We think we’re entering a seasonally difficult period and with a Fed that seems very, very committed to being a hawk, keeping rates tight for longer, we just don’t see a whole lot of reason to be jumping into the equity markets. And the fixed income markets show a little more interest because they’ve backed up so much in terms of yield. But we’re certainly positioned cautiously in our portfolios.”

Rate-sensitive stocks including, Tesla and Microsoft surged after a tough few weeks, as the 10-year Treasury yield fell from three-month highs on Wednesday.

Energy stocks fell as oil prices tumbled about 5% on demand worries related to looming recession risks.

Shares of Walmart, Target and McDonald’s gained after all three companies announced bond offerings.

And shares of Twitter rose more than 6.5% after a Delaware judge ruled that billionaire Elon Musk could not delay the trial over his bid to get out of buying the social media company.

The trial is scheduled to start on Oct. 17.

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