By Stephen Culp
NEW YORK - U.S. stocks turned sharply higher and benchmark Treasury yields continued to climb after investors shrugged off UK Prime Minister Liz Truss's resignation and focused on upbeat earnings and evidence that aggressive Fed policy is beginning to have its intended effect.
All three major U.S. stock indexes overcame initial indecision to surge into positive territory, and 10-year Treasury yields continued to march past 14-year highs.
"When sentiment is overly bearish it’s typically a good time to invest," said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. "Sell on the trumpet buy on the cannons."
British Prime Minister Liz Truss announced she would resign next week, capping a brief 6-week tenure marked by turmoil caused by a poorly received economic policy, which undermined confidence in her leadership.
A spate of mixed company earnings and economic indicators provided some evidence of economic slowdown, but a dip in jobless claims showed the Fed's aggressive campaign of interest rate hikes has had little effect on the tight U.S. labor market.
"We have strong corporate earnings, a strong labor market and an economy slowing but without the risk, for now, of putting us into a deep recession," Pursche added. "The case for a soft landing or mild recession could still hold true."
The Dow Jones Industrial Average rose 283.99 points, or 0.93%, to 30,707.8, the S&P 500 gained 26.27 points, or 0.71%, to 3,721.43 and the Nasdaq Composite added 119.60 points, or 1.12%, to 10,800.10.
European stocks whipsawed after Truss said she would leave 10 Downing Street, but were last showing solid gains.
The pan-European STOXX 600 index rose 0.35% and MSCI's gauge of stocks across the globe gained 0.57%.
Emerging market stocks rose 0.03%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.28% lower, while Japan's Nikkei lost 0.92%.
Benchmark Treasury yields resumed their rise after economic data appeared to confirm the Fed is unlikely to relent in its aggressive campaign to rein in inflation.
Benchmark 10-year notes last fell 5/32 in price to yield 4.1506%, from 4.129% late on Wednesday.
The 30-year bond fell 16/32 in price to yield 4.1611%, from 4.127% late on Wednesday.
The greenback lost ground against a basket of foreign currencies as sterling gained but market participants were on alert for Japanese intervention in the yen, which touched 150 per dollar for the first time since 1990.
The dollar index fell 0.64%, with the euro up 0.48% to $0.9818.
The Japanese yen strengthened 0.07% to 149.80 per dollar, while Sterling was last trading at $1.1305, up 0.81% on the day.
Oil prices jumped on signs of tightening supply and news of China's moves to ease COVID restrictions.
U.S. crude rose 1.96% to $86.18 per barrel and Brent was last at $94.06, up 1.79% on the day.
Weakness in the dollar helped gold rebound from a three-week low.
Spot gold added 0.7% to $1,640.59 an ounce.
