Wall Street Holds Steadier as Its September Swoon Eases

NEW YORK (AP) -- Wall Street is holding steadier Wednesday as its sharp September swoon eases up a bit.

The S&P 500 was 0.3% higher in early trading, a day after dropping 1.5% to its lowest level since June. The Dow Jones Industrial Average was up 13 points, or less than 0.1%, at 33,632, as of 9:50 a.m. Eastern time, and the Nasdaq composite was 0.5% higher.

Stocks were feeling some relief from relaxing pressure within the bond market. There, Treasury yields eased back from their highest levels in more than a decade. High yields mean bonds are paying more in interest, which makes investors less willing to pay high prices for stocks and other riskier investments.

The yield on the 10-year Treasury pulled back to 4.52% from 4.55% late Tuesday.

It's been generally charging higher as traders accept a new normal where interest rates will stay high for longer. The 10-year yield was at about 3.50% in May and just 0.50% early in the pandemic.

After more than a decade where the Federal Reserve would often cut rates in order to help the economy, still-high inflation is now discouraging the Fed from lowering rates quickly. It's already raised its main interest rate to the highest level since 2001, and it indicated last week it will cut rates by less in 2024 than earlier expected.

Strategists at Bank of America say yields could keep rising further. Even if the Fed is close to done with hiking its overnight interest rate, it could hold the rate there for a long time. That in turn would push up medium- and longer-term yields.

It all has brought an end to the old era of investing, where the mantra was "There Is No Alternative" to stocks because bonds were paying such scant yields. With bonds now paying much more and providing real alternatives, stock prices could feel downward pressure for a while.

Even so, the "Fed won't be overly reactive" to drops in stock prices because the overall economy remains solid, the strategists led by Mark Cabana wrote in a BofA Global Research report.

A report on Wednesday said orders for long-lasting manufactured goods were stronger last month than economists expected. It's the latest signal that the overall economy remains solid despite much higher interest rates.

The upside of such strength means the economy has so far avoided a long-predicted recession. But it also could keep enough upward pressure on inflation to encourage the Fed to keep rates high.

Recent jumps in oil prices have likewise turned up the heat on inflation, and crude climbed further Wednesday.

Benchmark U.S. crude rose 2.1% to $92.28 per barrel, up from less than $70 in June. Brent crude, the international standard, added 1.5% to $93.85 per barrel.

Besides high interest rates, a long list of other worries is also tugging at Wall Street. The most immediate is the threat of another U.S. government shutdown as Capitol Hill threatens a stalemate that could shut off federal services across the country as soon as this weekend.

A shutdown would furlough millions of federal employees, leave the military without pay, disrupt air travel and cut off vital safety net services.

Wall Street also is contending with shaky economies around the world, a strike by U.S. auto workers that could put more upward pressure on inflation and a resumption of U.S. student-loan repayments that could dent spending by households.

Stock markets abroad were also modestly higher despite such pressures.

Indexes rose 0..8% in Hong Kong and 0.2% in Shanghai even though concerns remain high about a faltering economic recovery and troubles for Chinese property developers, including the heavily indebted Evergrande.