Stocks rally to start October and new quarter, Dow up more than 600 points

Stocks rallied on Monday to start the new month and quarter as Treasury yields eased from levels not seen in about a decade.

The Dow Jones Industrial Average jumped 681 points, or 2.3%. At one point, he reached around 700 points. The S&P 500 rose 2.1%, after falling to its lowest level since November 2020 on Friday, and the Nasdaq Composite gained 1.6%.

The moves came as the yield on the 10-year U.S. Treasury fell back to around 3.7%, having topped 4% at one point last week.

“It’s pretty straightforward at this point, the 10-year Treasury yield is rising and stocks are likely still under pressure,” Raymond James’ Tavis McCourt said. “It’s going down and stocks are recovering.”

Wall Street is coming off a tough month, with the Dow and S&P 500 posting their biggest monthly losses since March 2020. The Dow also closed Friday below 29,000 for the first time since November 2020.

The Dow Jones lost 8.8% in September, while the S&P 500 and Nasdaq Composite lost 9.3% and 10.5% respectively.

For the quarter, the Dow Jones fell 6.66% to post a three-quarter losing streak for the first time since the third quarter of 2015. The S&P and Nasdaq Composite fell 5.28% and 4 .11%, respectively, to end their third consecutive negative quarter. for the first time since 2009.

At the start of the new quarter, all sectors of the S&P 500 are at least 10% off their 52-week highs. Nine sectors ended the quarter in negative territory.

In the fourth quarter, high inflation and a Federal Reserve determined to stop soaring prices, whatever its impact on the economy, will likely continue to weigh on markets, said Keith Lerner of Truist. However, oversold conditions also make the market vulnerable to a strong short-term rebound on good news, he added.

“I think we could be set up for some type of reprieve, but the underlying trend at this point is still a downtrend and choppy waters to continue,” Lerner said.