US stocks rose sharply on Wednesday as a sharp rise in Treasury yields eased after the 10-year note, a key economic linchpin, briefly topped 4% amid the worst bond selloff in decades .
The S&P 500 and Dow Jones Industrial Average each jumped more than 1.6% after hitting new 2022 lows this week, while the Nasdaq Composite advanced about 1.5% .
Across the Atlantic, the Bank of England said it would carry out temporary purchases of long-term UK government bonds, an emergency intervention to help stabilize its currency.
“If the dysfunction in this market were to continue or worsen, there would be a significant risk to the UK’s financial stability,” BoE officials said in a statement on Wednesday morning. “This would lead to an unwarranted tightening of financing conditions and a reduction in the flow of credit to the real economy.”
Major moves in fixed income and currency markets came into focus on Wednesday morning as central bank and recession concerns kept investors on the sidelines. On the bond side, the benchmark 10-year Treasury note temporarily topped 4%, the highest level since 2008, before retreating to around 3.8%.
“Long-term U.S. Treasury price volatility is reaching statistically unusual levels right now, as it did in June 2022,” DataTrek’s Nicholas Colas said in a morning note. “US stocks bottomed out that month as yields stabilized.”
In business, shares of Apple ( AAPL ) fell more than 3% in early trading after a report that the tech giant is scrapping plans to increase production of its new iPhones this year after demand for the product fell short of expectations.
Analysts at Morgan Stanley expressed skepticism at the news, calling the reports “more bark than bite” and noting that “better-than-expected iPhone 14 Pro/Pro Max demand upside likely will be offset by a weaker iPhone 14/14 Plus. The demand does not imply any downside to its iPhone shipment forecasts.”
Elsewhere, shares of DocuSign ( DOCU ) rallied 3.5% at the open after the company said it expects to restructure and cut its workforce by about 9%.
Shares of Biogen ( BIIB ) jumped about 40% on Wednesday after a successful trial of its experimental Alzheimer’s drug. News that the test slowed Alzheimer’s progress by 27% compared to a placebo in a clinical trial also boosted shares of fellow drugmaker Eli Lilly ( LLY ), which rose more than 7% .
Some Wall Street giants have turned more bearish on stocks, signaling the risk of a global recession as central banks take the most aggressive monetary action in decades.
Strategists at BlackRock Investment Institute (BLK) said policymakers were downplaying the extent of the economic pain needed to bring inflation down quickly.
“The markets are not pricing this in, so we avoid most stocks,” a team led by Jean Boivin said in a note earlier this week.
Goldman Sachs ( GS ), Wall Street’s top investment bank, cut stocks to underweight its global allocation over the next three months, citing rising real yields as a headwind.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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