Wall Street ended up trading day higher on Monday and the benchmark US Treasury yields fell below the 3% mark on Monday as investors braced for a widely anticipated US Federal Reserve interest rate hike.
All three major US stock indexes gyrated between positive and negative territory during the session, and the 10 year Treasury yield touched its highest level in more than three years.
Wall Street's last-minute rally came on the heels of the S&P 500's worst January-April drop since 1932, as market participants steadied themselves for signs of increased hawkishness from the Fed at the end of its monetary policy meeting on Wednesday.
Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut, said the market is facing a number of challenges and there is not a lot of conviction.
Pavlik added that it's becoming very reminiscent of the early '70s. We've hit 3% on the 10 year Treasury yield interest rates, there is a war going on, the economy is slowing down. We need Richard Nixon to come out of the ground. A report from the Institute for Supply Management showed that US factory activity was losing steam, while its purchasing managers' index PMI was well below consensus.
This followed a PMI report from China showing factory activity contracting for the second consecutive month as widespread COVID 19 shutdowns disrupted production and supply chains.
The Dow Jones Industrial Average was up 84.29 points, or 0.26%, to 33,061. The S&P 500 increased 23.45 points, or 0.57%, to 4,155, the S&P 500 gained 23.45 points, or 0.57%. 38 and the Nasdaq Composite added 201.38 points, or 1.63%, to 12,536. The S&P 500 was down by 1.7% at its lowest point for the day.
European stocks fell to a much lower close on the glum China factory data, although the STOXX 600 pared its losses due to a sudden 3% plunge earlier in the session, which some brokers called a flash crash caused by an erroneous trade.
The pan-European STOXX 600 index lost 1.46% and MSCI's gauge of stocks fell 0.05%.
Emerging market stocks lost 0.47%. The broadest index of Asia-Pacific shares outside Japan closed 0.47% lower, while Japan's Nikkei lost 0.11%.
The US Treasury yield crossed the 3% barrier for the first time since December 2018, with the benchmark 10 year yield crossing the 3% barrier for the first time since December 2018.
The price of the 10-year notes fell 26 32 last year to yield 2.9866%, from 2.885% late on Friday.
The 30 year bond last fell 58 32 in price to yield 3.0487%, from 2.946% late on Friday.
Concerns over weak demand due to bleak factory data from China overshadowed a potential European ban on Russian oil that caused fears of tightening supply.
The US crude settled at 105.17 per barrel for a 0.46% gain, while Brent gained 0.41% to settle at $107.58 per barrel.
The dollar was close to a 20 year high against a basket of currencies, ahead of the Fed's expected rate hike, as investors focused on the possibility that the FOMC could adopt an even more hawkish stance than expected.
The dollar index went up 0.65%, with the euro down 0.36% to $1.0503.
The Japanese yen weakened 0.27% to 130.20 per dollar, while the euro was trading at $1.2488 last trading on the day, down 0.66%.
The prospect of higher interest rate hikes from the Fed lifted Treasury yields and the dollar, leading to a plunge in gold prices to near 3 month lows.