Stocks roar back as Treasuries halt bearish frenzy

Stocks climbed the most in about a month as Treasury yields halted a surge to multiyear highs, with traders sifting through remarks from a slew of Federal Reserve speakers.

Oil plunged, easing concern about price pressures that could imperil the central bank’s war against inflation.

About 95% of the companies in the S&P 500 moved higher, with every group but energy ending in the green.

Only four of the Nasdaq 100’s members fell as a rally in the tech-heavy gauge topped 2%.

Apple rose after unveiling a new lineup of devices with few surprises beyond one major one: It didn’t raise its U.S. prices during one of the worst years for inflation in decades.

“Stocks are rebounding as the global bond market selloff takes a break,” wrote Edward Moya, senior market analyst at Oanda. “Economic momentum remains for the U.S. economy, and that could only improve if inflation continues to soften.

“Investors seem poised to enter a holding pattern until (Tuesday’s) inflation report.”

Oil benchmarks took a hit as demand concerns emanating from China prompted a wave of selling as prices breached technical warning levels.

West Texas Intermediate settled below $82 a barrel while Brent closed at $88.

The dollar fell after a rally that rattled currencies around the globe and briefly drove gold below the “danger zone” of $1,700 per ounce.

In the final week before officials enter a blackout period ahead of the Sept. 20-21 policy meeting, Fed Vice Chair Lael Brainard said the U.S. will have to raise interest rates to restrictive levels, while cautioning risks would become more two-sided in the future.

She also sees the scope for lower retail margins to ease price pressures.

Separately, Fed Bank of Cleveland President Loretta Mester warned against declaring early victory on inflation, while her Boston counterpart Susan Collins said it’s too soon to specify what policy makers should do at this month’s gathering.

Fed Vice Chair for Supervision Michael Barr said that inflation is “far too high” and central bankers are committed to restoring price stability.

High prices and a tight labor market weighed on U.S. economic prospects over the next year, though inflation showed signs of decelerating, the Fed said in its Beige Book.

Equities have tumbled since mid-August amid a panoply of risks spanning from restrictive central banks, Europe’s energy crisis and China’s economic slowdown.

The recent slide in the S&P 500 pared a bounce from June lows that a Goldman Sachs Group team led by Peter Oppenheimer described as a “bear-market rally.”

The strategists “expect further weakness and bumpy markets before a decisive trough is established.”

American stocks haven’t fallen enough to account for the elevated inflation pressures that will drive the Fed to keep interest rates high for a sustained period of time, billionaire investor Thomas Peterffy said.

The founder and chairman of Interactive Brokers Group told Bloomberg Television the S&P 500 won’t hit a bottom until it trades at levels between 3,300 and 3,500.

After it reaches that trough, it will stay there for “a while” until the U.S. contends with an inflation-fueled economy. The gauge closed at 3,979.87 Wednesday.

“Economies all around the world are slowing down, and that’s really not a market that says we’re on the verge of a dynamic rebound in equities,” Margaret Patel, senior portfolio manager at Allspring Global Investments, told Bloomberg Television. “Earnings are going to decelerate a lot. That says a lot of stocks could go down.”

Bank of America clients were net sellers of U.S. equities for a third straight week.

As the S&P 500 posted weekly losses of over 3%, the group sold $1.9 billion in equities, including exchange-traded funds and single stocks, strategists led by Jill Carey Hall wrote.

The weakening economy should favor continued outperformance for cheaper, so-called value stocks over their growth equivalents, a separate Goldman note from strategists led by Cormac Conners said.

“History shows value stocks outperform around the start of recessions,” they wrote.