Wall Street churns higher as bond yields pause, debt ceiling debate persists

NEW YORK (Reuters) – Wall Street seesawed in choppy trading on Wednesday, regaining some of the ground lost in the previous session’s broad sell-off although initial gains were capped by concern over remarks from U.S. Federal Reserve Chairman Jerome Powell and the ongoing debt ceiling debate.

All three major U.S. stock indexes ticked higher as Treasury yields halted their ascent, with defensive sectors taking the lead as investors sought stability in the volatile market.

Still, all three remain on course to post monthly declines, with the bellwether S&P 500 snapping a seven-month winning streak.

“We’ve had a rough patch, and you can’t say we’re done with these volatile days. September and October are weak for the market,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

“We’ve had seven ‘up’ months, so having a down month on what’s usually the weakest month of the year, especially with cross-currents of inflation and the prospect of higher taxes, doesn’t seem that concerning to me.”

Powell, speaking at a European Central Bank event, expressed frustration over persistent supply chain woes which could keep inflation elevated for longer than expected.

Extended wrangling on Capitol Hill over funding the government even as the Friday deadline approached, and concerns over potential shutdowns and a U.S. credit default.

“The biggest negative surprise over the next couple of days could come from Washington and that could result in weakness until they raise the debt ceiling because there really is no alternative,” Tuz added.

U.S. Treasury yields paused after a runup in recent days as the debt ceiling debate unfolded in Washington.

The Dow Jones Industrial Average rose 256.64 points, or 0.75%, to 34,556.63; the S&P 500 gained 28.41 points, or 0.65%, at 4,381.04; and the Nasdaq Composite added 56.88 points, or 0.39%, at 14,603.56.

Of the 11 major sectors in the S&P 500, all but materials were most recently in positive territory, with utilities enjoying the largest percentage gain.

Boeing Co provided the biggest lift to the Dow after China’s aviation regulator’s successful 737 MAX test, boosting the planemaker’s by 3.9%.

Discount retailer Dollar Tree Inc jumped 16.4% after increasing its buyback authorization by $1.05 billion to $2.5 billion.

Drugmaker Eli Lilly gained 3.8% after Citigroup raised its rating of the stock to “buy” from “neutral.”

Advancing issues outnumbered decliners on the NYSE by a 1.54-to-1 ratio; on Nasdaq, a 1.07-to-1 ratio favored decliners.

The S&P 500 posted five new 52-week highs and two new lows; the Nasdaq Composite recorded 27 new highs and 126 new lows.

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