U.S. stocks rallied Monday, with the Dow Jones Industrial Average gaining 765 points after a dismal September. Photo by John Angelillo/UPI | License Photo
Oct. 3 (UPI) -- U.S. markets rallied Monday to start a new month and quarter with significant gains after a dismal end to September.
The Dow Jones Industrial average shot up 765.38 points, or 2.66%, to close at 29,490. The S&P 500 climbed 92.81 points, or 2.59%, to 3,678.43, and the Nasdaq Composite gained 239.82 points, or 2.27%, to 10,815.44.
The 10-year Treasury yield finished at 3.65%, down from 3.8%, while the 2-year Treasury yield dropped to 4.1% from $4.2%.
"It's pretty simple at this point, 10-year Treasury yield goes up, and equities likely remain under pressure. It comes down, and equities rally," Tavis McCourt of Raymond James said, according to CNBC.
Sam Stovall, CFRA chief investment strategist, told CNBC that slowdowns in manufacturing and construction likely contributed to Monday's rally. He also noted that fourth-quarter rallies are historically stronger in midterm election years.
The Institute for Supply Management reported Monday that the manufacturing purchasing managers index fell to 50.9 in September, or 1.9 points lower than August's manufacturing PMI.
The report marked the 28th consecutive month of growth, with an index above 50 representing expansion. The index fell below economists' estimate 52 for September.
"The U.S. manufacturing sector continues to expand, but at the lowest rate since the pandemic recovery began," ISM Chairman Timonthy Fiore said in a news release.
"Following four straight months of panelists' companies reporting softening new orders rates, the September index reflects companies adjusting to potential future lower demand.
Slower economic activity could indicate that the Federal Reserve may slow interest rate hikes. The Fed has raised its benchmark federal funds rate four consecutive times in a move to fight inflation, and another hike is widely anticipated in November. The moves have raised fears of a recession and roiled markets.
"While investors have largely accepted that the U.S. central bank will continue to hike rates to bring down inflation, shifting expectations around the pace and length of the current hiking cycle are likely to create swings in market performance," said Mark Haefele, chief investment officer of global wealth management at UBS, according to Barron's.
Oil prices rose sharply Monday, with Brent crude rose up 4.4% to end at $88.86 per barrel and West Texas Intermediate up 5.2% to $83.63 per barrel.
The increases came amid reports that the Organization of Petroleum Exporting Countries was considering cutting production by more than 1 billion barrels per day at its meeting this week.
Monday's close was a sharp turn from Friday, when the three major indexes closed out September with their worst first nine months since 2002, with the Dow down 21% year to date, the S&P 500 down 24.8% and the Nasdaq down 32.4%