US Stocks Rally as Falling Oil, Treasury Yields Lift Market Mood

US stocks rebounded on Thursday as falling oil prices and easing pressure in the bond market helped Wall Street recover much of its losses from the previous session.

The S&P 500 gained 1.1 per cent to 7,637.76, rising 85.95 points. The Dow Jones Industrial Average added 316.14 points, or 0.6 per cent, to 51,778.04, while the Nasdaq Composite climbed 1.7 per cent to 26,418.30.

The gains came after oil prices declined from levels reached earlier in the week. Brent crude, the international benchmark, fell 0.94 per cent to USD 103.83 a barrel in Asian trading. US benchmark crude declined 0.83 per cent to USD 101.06 a barrel.

Brent had approached USD 110 a barrel earlier in the week amid concerns that the war with Iran could disrupt oil supplies from the Middle East. Although the recent decline eased some pressure on markets, Brent remained above the USD 72 a barrel level recorded earlier in the summer.

The retreat in oil prices was accompanied by lower Treasury yields. The yield on the 10-year US Treasury fell to 4.93 per cent from 5.01 per cent late Wednesday.

The market gains followed the Federal Reserve’s interest-rate decision on Wednesday. The US central bank raised its federal funds rate by a quarter of a percentage point, marking its first increase in more than three years.

Federal Reserve officials also indicated they could raise the federal funds rate once more this year as they work to bring high inflation in the United States under control.

The rate decision had led to sharp movements in Wall Street trading on Wednesday. Stocks initially remained higher after the announcement before falling sharply and then recovering some of their losses by the close.

The higher-rate environment reflected the Fed’s focus on returning inflation to its 2 per cent target, while also affecting prices of stocks and other investments.

Thursday’s market movement followed the easing in oil prices and the decline in Treasury yields. The S&P 500 had its second gain in nine sessions, while the Dow and Nasdaq also advanced.