U.S. stocks jump after dovish rate comments by Fed officials; yields fall

Investing.com — U.S. stocks were rising, and Treasury yields fell, after commentary by Fed officials put the focus on the central bank’s next interest rate move.

At 10:41 ET (14:41 GMT), the Dow Jones Industrial Average rose 191 points or 0.6% while the S&P 500 was up 0.8% and the NASDAQ Composite was up 0.9%.

The main indices on Wall Street closed higher Monday, overturning early losses, buoyed in part by dovish statements from Fed officials, who suggested that a recent move higher in U.S. bond yields could lessen the need for further interest rate hikes.

Fed Vice Chair Philip Jefferson said on Monday that the central bank could “proceed carefully” in deciding whether any further increases are warranted, while Dallas Fed President Lorie Logan indicated rising Treasury yields could steer the Fed from further rate increases.

This was accompanied by a drop in yields, with the benchmark 10-year U.S. Treasury yield dropping from its 16-year peak early Tuesday as trading resumed in the U.S. bond market after Monday’s Columbus Day holiday. The 10-year Treasury yield eased back to 4.676%. Investors are also seeking safe assets given the escalating conflict in the Middle East. 

The 30-stock Dow ended Monday almost 200 points, or 0.6%, higher, the benchmark S&P gained 0.6%, while the tech-heavy Nasdaq closed up 0.4%.

Plethora of Fed speakers due

There are a number of Fed officials due to speak later Tuesday, including Raphael Bostic, Christopher Waller, Neel Kashkari and Mary Daly

Their views on the path of interest rates for the remainder of the year will be in focus ahead of Wednesday’s release of the minutes from the last Fed meeting in September. But futures traders are already putting an 86% probability on the Fed holding rates steady in November.

PepsiCo lifts annual profit forecast

In corporate news, the third quarter earnings season is just starting out, with PepsiCo (NASDAQ:PEP) the highlight Tuesday.

The soft drinks giant lifted its annual profit forecast for a third time this year, banking on multiple price increases and resilient demand for its snacks and beverages. Its stock rose 2.1%.

Other companies set to report during the week include Delta Air Lines (NYSE:DAL) on Thursday as well as the banking giants JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) on Friday. 

Crude supply outlook in focus

Oil prices slipped lower Tuesday, handing back some of the previous session’s sharp gains with traders keeping a wary eye on the conflict between Israel and Hamas and the potential for supply disruptions.

Both benchmarks surged more than 4% on Monday as traders worried the potential for the conflict to escalate, hitting Middle East supply and making an already tight supply picture worse.

(Oliver Gray contributed to this item.)