A smattering of positive developments helped investor sentiment yesterday. But long-term prospects still look uncertain.
Yields on U.S. Treasurys pulled back slightly. At 4.589%, the 10-year yield’s still the highest it’s been in decades, but it’s actually down around five basis points from Wednesday. And it’s the direction of the move traders are keeping their eye on.
Likewise, oil prices retreated, giving investors — and the broader economy — a slight reprieve. U.S. West Texas Intermediate futures fell 2.1% to settle at $91.71 while Brent dropped 1.21% to $95.38.
That easing of pressure, however small, gave stocks some confidence to rise. The Dow Jones Industrial Average climbed 0.35% for its first positive session in three. The S&P 500 added 0.59% to hit 4.299.80, a hair’s breadth away from the key 4,300 level. The Nasdaq Composite jumped 0.83%, propelled by a rebound in tech stocks — shares of AMD, in particular, popped nearly 5% after Microsoft’s chief technology officer praised the chipmaker.
Investors, however, aren’t so sure about the long run. According to the latest survey by the American Association of Individual Investors, which measures retail investors’ sentiment for stocks over the next six months, overall bearishness climbed from 34.6% last week to 40.9%. That’s the highest since mid-May and over the historical average of 31%.
Renowned analysts and fund managers were similarly pessimistic at CNBC’s Delivering Alpha conference. Warnings of an impending recession, the 10-year Treasury yield approaching 5% and another rate hike by the Federal Reserve dominated the summit.
Of course, those are warnings, not immutable courses of action. If, for instance, the personal consumption expenditures price index, which comes out later today, satisfies the Federal Reserve that inflation is adequately tamed, rates might remain unchanged for the rest of the year and give stocks more room to breathe. But the mood, for now at least, is things are going to get worse before they get better.
— CNBC’s Scott Schnipper contributed to this report
