Stocks up, yields retreat as investors eye slower manufacturing

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Stock Markets 28 minutes ago (Oct 03, 2022 02:04PM ET)

Stocks up, yields retreat as investors eye slower manufacturing © Reuters. FILE PHOTO: The OPEC logo pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria, September 28, 2016. REUTERS/Ramzi Boudina

By Pete Schroeder

WASHINGTON (Reuters) -U.S. stocks and oil prices jumped on Monday as investors kicked off the final quarter of the year with a close eye on any potential economic slowdown.

All three major U.S. stock indices were up in midday trading, with the surging 2.09%. The was up 1.88%, while the added 1.44%.

The MSCI world equity index, which tracks shares in 45 nations, was up 1.485%.

Stocks rose after a brutal third quarter of steep declines. New data showing U.S. manufacturing activity grew at its slowest pace in nearly 2-1/2 years injected some life into stocks on the thought that economic weakness could slow inflation and ensuing efforts by the Federal Reserve to continue hiking interest rates.

“Traders are taking the view that bad news for the economy is good news for the stock market,” said David Madden, market analyst at Equiti Capital. “High inflation is the reason why the Fed is tightening monetary policy and considering the fall in prices paid, we could be witnessing further signs that we are beyond peak inflation.”

Investors will have a raft of new economic data to process this week, culminating in the monthly U.S. jobs report due Friday. As with manufacturing, signs of softening in that data could show rate hikes having their intended effect of slowing the economy and inflation, although Fed officials maintain they will not change course until price increases are under control.

“With the job market still looking quite tight and wage growth strong, it will take more than these soft monthly indicators to take the Fed off of the inflation-fighting warpath,” said Bill Adams, chief economist for Comerica (NYSE:) Bank.


Crude prices jumped after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said it would consider reducing output. Dropping supply expectations helped push up 3.51% at $88.13 a barrel. was up 4% at $82.70 per barrel.

News of the British government’s decision to abandon plans for a tax cut helped push down yields on the benchmark U.S. 10-year Treasuries, which were last yielding 3.6406%.

Sterling jumped against the dollar Monday on Britain’s tax cut reversal, reversing a brutal drop and surging nearly 1% in afternoon trading. The safe-haven dollar also took a broader step back Monday, with the , which tracks the greenback versus a basket of six currencies, falling 0.23%.

Dips in Treasury yields and the dollar also helped gold prices climb, with prices rising 1.91% to $1,691.30 an ounce.

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