Stocks climb and US yields ease; yen jumps against dollar
The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 1, 2026. REUTERS/Staff
NEW YORK, Sept 2 : Stock indexes mostly rose on Wednesday after three days of declines as investors watched for new developments in the U.S.-Iran conflict, while the Japanese yen rose sharply against the U.S. dollar.
It was not immediately clear what prompted the yen move. The currency had retraced over the last month about half of the gains made after a rare joint intervention by the U.S. and Japan at the end of July. The yen was last up 0.79 per cent at 158.92 per dollar.
U.S. Treasury yields eased from multi-year highs. The rise in borrowing costs across major economies had deepened concerns about tighter monetary policy and deteriorating fiscal conditions.
Investors remained focused on Iran. Fears of renewed escalation gripped the Middle East after the U.S. and Iran exchanged their biggest barrage since July. The flare-up threatens to deepen a conflict that has dragged on since the U.S. launched strikes on Iran in February.
Oil prices rose about 1 per cent amid worries about further disruption to energy supplies. Brent crude futures gained 98 cents, or 1 per cent, to settle at $95.63 a barrel. U.S. West Texas Intermediate crude futures rose 79 cents, or 0.9 per cent, to settle at $91.01.
Wall Street stocks ended higher in a partial rebound from their recent fall, which was tied to the escalation in the Middle East and the global bond selloff.
"We're seeing a little bit of a relief rally in stocks after the underperformance that came" with higher yields, said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.
Investors may be looking for bargains after the recent selling, he said. "The (U.S.) economy itself remains strong, so one of the difficulties in investing in stocks is that a strong economy often leads to higher rates, and you have that tension between good earnings and the potential for the competition that bonds can offer... Most investors have remained committed to stocks."
The Dow Jones Industrial Average rose 295.07 points, or 0.56 per cent, to 53,061.95, the S&P 500 climbed 35.13 points, or 0.46 per cent, to 7,666.60 and the Nasdaq Composite was up 118.05 points, or 0.45 per cent, to 26,217.83.
MSCI's gauge of stocks across the globe was 0.14 points higher at 1,142.87 after ending lower for the previous three sessions. The pan-European STOXX 600 index fell 0.24 per cent.
The yield on benchmark U.S. 10-year Treasury notes shed 0.2 basis point to 4.794 per cent and was on track to snap its longest streak of daily gains since March. The yield hit an earlier high of 4.818 per cent, its highest since November 1, 2023.
The yield on 10-year Japanese government bonds held above 3 per cent for a second straight session after hitting a three-decade high earlier this week.
Traders have recently increased bets on a Federal Reserve interest rate hike. They now assign a roughly two-in-three chance that the Fed will deliver a 25-basis-point rate increase this month, up from 37 per cent a week ago, according to CME Group's FedWatch tool.
Ahead of the Fed's September 15 to 16 meeting, investors are looking to upcoming U.S. economic data for clues on whether the economy remains strong enough to justify monetary policy tightening. The key monthly U.S. jobs report is due on Friday.
On Wednesday, the U.S. ADP National Employment Report showed private employment rose by 38,000 jobs last month, below the 48,000 increase expected by economists polled by Reuters, after an upwardly revised 46,000 in July.
"We're in this situation now where policy becomes very difficult, and then you get data like today in the ADP number, which was a miss, showing a pretty slow pace of growth," said Thomas Urano, co-chief investment officer at Sage Advisory in Austin, Texas.
Policy meetings of the European Central Bank and the Bank of Japan will also be closely watched as markets gauge how far major central banks are prepared to tighten policy in response to persistent inflation risks.
Hawkish BOJ board member Hajime Takata said on Wednesday that the central bank should conduct interest rate hikes nimbly to counter intensifying inflationary pressures, rather than adhere to a fixed semiannual pace anticipated by markets.
In the metals market, spot gold rose 1.33 per cent to $4,386.29 an ounce.
