By Sinead Carew and Amanda Cooper
NEW YORK/LONDON (Reuters) – Stocks around the world rebounded on Tuesday from a sharp sell-off the previous day, while Treasury yields rose and the dollar firmed slightly as investors returned to riskier assets and central banks responded to recession fears.
Oil prices rose on Tuesday after hitting multi-month lows on Monday, as investors turned their attention to tight supply while financial markets recovered, easing concerns about the outlook for energy demand.
Earlier, a rebound of about 10% in Tokyo brought some relief after the index plunged 12.4% on Monday, sparking a global selloff with the biggest one-day sell-off in the Japanese benchmark since the Black Monday crash of 1987.
The index had lost 3% on Monday, while the Nasdaq fell 3.43%, continuing a recent sell-off as fears of a possible recession in the United States rattled global markets.
Federal Reserve policymakers on Monday dismissed the idea that weaker-than-expected jobs data in July means the economy is in free fall.
San Francisco Federal Reserve Bank President Mary Daly said late Monday that the jobs report leaves “a little more room for confidence that we’re slowing but not falling off the cliff.” But she said it’s “very important” to prevent the labor market from collapsing.
“The question investors are grappling with is whether we are hitting an economic air pocket or whether it is a hoax,” said Scott Helfstein, head of investment strategy at GlobalX. “The jobs report was a one-month one, so you have to be careful about reading too much into it.”
“With no economic data this week, the market will have to work out whether we continue to bounce or whether we will stabilize and be patient for more information,” he added.
On Wall Street, the S&P 500 rose 125.02 points, or 2.41%, to 5,311.35 as of 2:53 p.m. ET, to close at 16,614.57. The S&P 500 gained 414.49 points, or 2.56%, to 16,614.57.
The MSCI World Index rose 15.59 points, or 2.05%, to 777.67, on track for its biggest daily percentage gain since late 2022. That came after the index fell more than 3% on Monday, its third straight day of losses.
The European index earlier closed 0.29% higher in a volatile session during which it fell as much as 0.54%.
In currency markets, the dollar recovered against its major counterparts and the Japanese yen held around seven-month highs against the greenback as some of the more eye-catching moves of recent days were somewhat reversed and a measure of calm returned to markets.
The dollar, which measures the value of the greenback against a basket of currencies including the yen and the euro, rose 0.08 percent to 102.95.
The dollar rose against the Japanese yen by 0.71% to 145.19 yen, while the euro fell by 0.19% to 1.0931 dollars.
U.S. Treasury yields rose as fears that the U.S. economy was quickly sliding into recession were deemed overblown, while demand for safe-haven U.S. bonds also waned as stocks recovered.
The yield on the benchmark 10-year U.S. Treasury note rose 10.7 basis points to 3.89%, compared with 3.783% late Monday.
The yield on the 30-year note rose 10.4 basis points to 4.1749%, compared with 4.071% late Monday.
The yield, which typically moves in line with interest rate expectations, rose 10.6 basis points to 3.9915%, from 3.885% late Monday.
Oil prices recovered after Monday’s sell-off. They settled up 0.36% at $73.20 a barrel and closed at $76.48 a barrel, up 0.24% on the day.
In precious metals, gold prices fell as the dollar and bond yields rose, but expectations of a US interest rate cut in September and escalating tensions in the Middle East limited losses.
Gold futures for August delivery fell 0.54% to $2,394.76 an ounce. Gold futures for August delivery fell 0.37% to $2,392.70 an ounce.