U.S. Stocks Move Sharply Higher Amid Downturn By Treasury Yields

(RTTNews) - Stocks saw significant volatility in early trading on Friday but moved sharply higher over the course of the session. The major averages more than offset the pullback seen over the two previous session, with the Dow reaching its best closing level in over a month.

The major averages reached new highs for the session late in the trading day. The Dow soared 748.97 points or 2.5 percent to 31,082.56, the Nasdaq surged 244.87 points or 2.3 percent to 10,859.72 and the S&P 500 spiked 86.97 points or 2.4 percent to 3,752.75.

With the strong upward move on the day, the major averages also moved sharply higher for the week. The Nasdaq skyrocketed by 5.2 percent, while the Dow and the S&P 500 shot up by 4.9 percent and 4.7 percent, respectively.

The rally on Wall Street comes as treasury yields showed a notable downturn after extending a recent surge in early trading.

The yield on the benchmark ten-year note finished the day modestly lower after spiking to a fifteen-year intraday high earlier in the session.

Traders have recently kept a close eye on developments in the bond market amid concerns about the Federal Reserve's aggressive interest rate hikes.

The pullback by yields came after a report from the Wall Street Journal suggested Fed officials are likely to debate whether and how to signal plans for a smaller rate hike in December following a widely expected 75 basis point increase in early November.

While recent comments from Fed officials have generally been hawkish, the journal said a few are signaling greater unease with the aggressive pace of rate hikes.

"The 10-year Treasury yield looked like it had a clear path towards 4.40%, but that quickly changed and now it seems like the October bond market selloff is ready for a break," said Edward Moya, senior market analyst at OANDA.

He added, "Policymakers still need to look at the data and right now the risks of overtightening should still remain on the table."

The volatility on the day may have reflected below average volume, as some traders stuck to the sidelines amid a lack of major U.S. economic data.

Next week, traders are likely to keep a close eye on a report on personal income and spending, which includes a reading on inflation said to be preferred by the Fed.

Despite the rally by the broader markets, shares of Snap Inc. (SNAP) moved sharply lower after the Snapchat parent reported mixed third quarter results and forecast flat revenue for the current quarter.

Hospital operator Tenet Healthcare (THC) also posted a steep loss after reporting better than expected third quarter results but providing disappointing guidance.

Shares of American Express (AXP) and Verizon (VZ) also moved to the downside even though the companies reported third quarter earnings that beat analyst estimates.

Sector News

Steel stocks moved sharply higher over the course of the session, driving the NYSE Arca Steel Index up by 5.3 percent to a one-month closing high.

Substantial strength also emerged among oil service stocks, as reflected by the 4.8 percent surge by the Philadelphia Oil Service Index. The index soared to its best closing level in over four months.

The rally by oil service stocks came as the price of crude oil for December delivery climbed $0.54 to $85.05 a barrel in its first day as the front-month contract.

An increase by the price of gold also contributed to considerable strength among gold stocks, resulting in a 4.5 percent jump by the NYSE Arca Gold Bugs Index.

Computer hardware, semiconductor, and housing stocks also showed significant moves to the upside as broad based buying interest emerged on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both fell by 0.4 percent, although China's Shanghai Composite Index bucked the downtrend and inched up by 0.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.4percent, the German DAX Index dipped by 0.3 percent and the French CAC 40 Index slid by 0.9 percent.

In the bond market, treasuries recovered from early weakness to end the day modestly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 4.213 percent after reaching a fifteen-year high of 4.333 percent.

Looking Ahead

The inflation reading contained in the personal income and spending report may be in the spotlight next week, although traders are also likely to keep an eye on reports on consumer confidence, new home sales, and durable goods orders.

A slew of big-name companies are also scheduled to report their quarterly results, including Coca-Cola (KO), General Electric (GE), General Motors (GM), UPS (UPS), Microsoft (MSFT), Boeing (BA), Ford (F), McDonald's (MCD), Apple (AAPL), Intel (INTC), and Exxon Mobil (XOM).