NEW YORK/LONDON -U.S. shares rebounded on Thursday after falling for three consecutive days and benchmark Treasury yields edged lower as investors snapped up technology stocks and shrugged off worries over rising prices, for now.
By early morning, the Dow Jones Industrial Average rose 1.5per cent, the S&P 500 was up 1.4per cent, and the Nasdaq Composite jumped 1.3per cent.
Yields on 10-year Treasuries, which had climbed 7 basis points overnight in the biggest daily rise in two months, edged lower in early trade to stand at 1.6744per cent.
"We’re certainly oversold here, so remember our 5-percent maxim: buy every S&P 500 down 5 percent close after the first one," said Nicholas Colas, co-founder of DataTrek Research.
Against a basket of major peers, the dollar was steady at 90.695, holding gains eked out on Wednesday when the greenback strengthened on data that showed U.S. faster-than-expected acceleration of inflation in April.
Before Thursday's recovery in U.S. stocks, world stock markets were spiraling toward their worst week of the year as the rise in U.S. inflation worried bond markets and as red-hot metals, crop and cryptocurrency prices all suffered sudden stops.
Asia took a pounding overnight, London's FTSE was down 2per cent before lunch, bond, commodity and U.S. futures markets were all deep in the red and Elon Musk and Tesla were no longer accepting bitcoin.
While there were plenty of idiosyncrasies, the overarching worry was that rising inflation pressure in the United States might force the Federal Reserve to start turning off its cheap money that has been driving markets rapidly higher.
"Inflation pressures are going to be rising, and they're not going to be temporary," said Jeremy Gatto, investment manager at Unigestion. "What does that mean? Effectively that (interest) rates will be rising."
Oil prices fell on Thursday despite a sharp drop in U.S. crude inventories, as market participants took profits following days of buying spurred by a cold snap in the largest U.S. energy-producing state.
Brent crude fell 2.4per cent 2020, while U.S. West Texas Intermediate crude dropped 2.6per cent.
For the cryptonites, there was a ray of light as bitcoin steadied at US$50,407 after a 13per cent drop when Elon Musk said Tesla would stop accepting it as payment because of the amount of fossil fuels that go into bitcoin "mining."
Bitcoin is created by high-powered computers competing against other machines to solve complex mathematical puzzles. At current rates the process is estimated to devour about the same amount of energy annually as the Netherlands did in 2019.
Ether, the world's second-largest cryptocurrency, gained 1per cent to US$3,852.43.
(Reporting by Koh Gui Qing; additional reporting by Tom Wilson and Marc Jones in London; Wayne Cole in Sydney; Editing by Sam Holmes, Shri Navaratnam, Gareth Jones, Nick Macfie and Dan Grebler)