Stocks have been facing pressure due to a bond selloff, resulting in the 10-year Treasury yield reaching its highest level since 2007. As a result, the S&P 500 has fallen by 2.7% this quarter and the Dow has lost 1.7%. However, there was a minor relief rally observed in the market recently. John Roe, head of multiasset at Legal & General Investment Management, referred to this as a “mini-relief rally.”
The dollar has been performing well this quarter and is on track for its best performance in a year. The WSJ Dollar Index has risen by 2.4% since the end of June, influenced by the increasing yields. In terms of economic indicators, the PCE price index, which is the Federal Reserve’s preferred measure of consumer inflation, showed a 0.4% rise in August. Excluding food and energy prices, the index increased by 0.1%. Additionally, both personal income and spending rose by 0.4%, primarily driven by higher gasoline prices.
Despite the overall market pressures, there were moderate gains in stocks observed. The S&P 500 increased by 0.7%, while the Nasdaq Composite, which is more focused on technology stocks, rose by 1%. Notably, Nike’s shares experienced a significant jump of 8.3% after the sportswear company’s quarterly profit exceeded Wall Street’s expectations. Treasury notes also saw some recovery, as the benchmark 10-year Treasury yield continued to decrease for a second day, along with a retreat in the U.S. dollar. Moreover, European stocks rallied, with the Stoxx Europe 600 showing a 1.2% increase. European economic data revealed that eurozone inflation cooled more than anticipated in September.