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Wall Street Has Best Day Since July    10/03 15:32

   Stocks on Wall Street rallied to their best day in months on Monday after 
falling bond yields eased some of the pressure that's been battering markets.

   NEW YORK (AP) -- Stocks on Wall Street rallied to their best day in months 
on Monday after falling bond yields eased some of the pressure that's been 
battering markets.

   The S&P 500's leap of 2.6% was its biggest since July, the latest swing for 
a scattershot market that's been mostly falling this year on worries about a 
possible global recession. Wall Street's main measure of health was coming off 
its worst month since the coronavirus crashed markets in early 2020 and is 
still down nearly 23% for the year.

   The Dow Jones Industrial Average jumped 2.7%, and the Nasdaq composite 
gained 2.3% in Monday's widespread rally that swept the vast majority of U.S. 
stocks higher.

   Giving some respite was a drop in Treasury yields, which have been surging 
at market-shaking speed for most of the year. The yield on the 10-year 
Treasury, which helps set rates for mortgages and many other kinds of loans, 
fell to 3.64% from 3.83% late Friday. It got as high as 4% last week after 
starting the year at just 1.51%.

   Helping to drive markets was a report on U.S. manufacturing that came in 
weaker than expected, along with data showing a drop off in construction 
sending. While that may seem discouraging for the economy, it could mean the 
Federal Reserve won't have to be so aggressive about raising interest rates in 
order to beat down the high inflation damaging households' finances.

   By raising rates, the Fed is making it more expensive to buy a house, a car 
or most anything else purchased on credit. The hope is to slow the economy just 
enough to starve inflation of the purchases needed to keep prices rising so 
quickly. But the Fed also risks causing a recession if it goes too far.

   The Fed has already pulled its key overnight interest rate to a range of 3% 
to 3.25%, up from virtually zero as recently as March. Most traders expect it 
to be more than a full percentage point higher by early next year.

   The yield on the two-year Treasury, which more closely tracks expectations 
for Fed action, fell to 4.11% from 4.27% following the weaker-than-expected 
reports on the economy.

   Besides stocks, lower rates also boost prices for everything from 
cryptocurrencies to gold, which can suddenly look a bit more attractive when 
bonds are paying less in income.

   Stocks of high-growth companies and particularly risky or expensive 
investments have been the most affected by changes in rates. Bitcoin rallied 
Monday with the reprieve in yields, while technology stocks did the heaviest 
lifting to carry the S&P 500. Apple and Microsoft both rose more than 3%.

   Altogether, the S&P 500 climbed 92.81 points to close at 3,678.43. The Dow 
gained 765.38 to 29,490.89, and the Nasdaq rose 239.82 to 10,815.43.

   Still, cross currents continue to course through markets, and analysts 
largely expect sharp swings in prices to continue.

   Crude oil prices jumped Monday amid speculation big oil-producing countries 
could soon announce cuts to production. That adds upward pressure on inflation.

   It also lifted shares of energy-producing companies to big gains. Exxon 
Mobil leaped 5.3%, and Chevron climbed 5.6%.

   Monday's rally came despite an 8.6% drop for Tesla, one of the most 
influential stocks on Wall Street because of its massive market value. The 
maker of electric vehicles delivered fewer vehicles from July through September 
than investors expected.

   More turbulence for markets could arrive Friday, when the latest update on 
the U.S. jobs market hits. Along with its reports on inflation, the U.S. 
government's jobs report has been one of the most highly anticipated pieces of 
data on Wall Street each month.

   It will be the last jobs report before the Fed makes its next decision on 
interest rates, scheduled for Nov. 2, and continued strength would give the 
central bank more leeway to keep hiking. Traders say the likeliest move is a 
fourth straight increase of a whopping three-quarters of a percentage point, 
triple the usual move.

   For markets to make a meaningful move higher, many investors say they need 
to see a break in inflation that gets the Fed to ease off its aggressive path.

   Such hopes for a Fed "pivot" by investors have repeatedly resurfaced this 
year, only to get shot down by further accelerations in inflation.

   But with stresses building in financial markets as central banks around the 
world hike rates in concert, conditions have gotten "into the danger zone where 
'bad stuff' happens," according to Michael Wilson, equity strategist at Morgan 
Stanley.

   That could get the Fed to blink at some point. The problem, Wilson says, is 
that another force weighing on markets could soon come to the forefront: weaker 
corporate profits.

   A suite of challenges from higher interest rates to the surging value of the 
U.S. dollar may be setting things up for "the freight train of the oncoming 
earnings recession," he wrote in a report. Companies are getting ready now to 
report in upcoming weeks how much they earned during the summer, and analysts 
have been downgrading their expectations.

 
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