The Dow Jones Industrial Average mounted a big comeback from its 2022 low as the Bank of England said it would buy bonds to stabilize its financial markets, a stunning reversal in the monetary tightening policies implemented this year by most central banks to stifle inflation.
The move stabilized the British pound, which became the center of attention in markets this week as it tumbled to a record low against the U.S. dollar. U.S. Treasury yields retreated from their highest levels in more than a decade, easing concerns that higher rates were choking the economy.
The Dow jumped 548.75 points, or 1.88%, to 29,683.74. The S&P 500 rose 1.97% to 3,719.04, one day after notching a new bear market low. The Nasdaq Composite was up 2.05%, ending the session at 11,051.64.
The Dow and the S&P 500 snapped a six-day losing streak. The Dow is now 19.7% off its 52-week high, while the S&P 500 is 22.8% below its record. The Nasdaq is down 31.8%.
The Bank of England said it would temporarily purchase long-dated UK government bonds in an effort to stabilize its plunging currency. Sterling recovered and was last trading roughly 1.4% higher against the dollar at $1.0881.
The 10-year U.S. Treasury yield ended the day at about 3.7% after earlier breaking above 4% for the first time since 2008.
The rally was broad-based. One notable outlier was Apple which was down about 1.3% after a Bloomberg report, citing people familiar with the matter, said the tech company is ditching plans to increase new iPhone production after demand fell short of expectations.
Some on Wall Street are worried that investors have not priced in an earnings slowdown and the impact of the Federal Reserve's rate hikes. The S&P 500 breaking below its previous low is a key indicator for some that stocks still have further to fall.
"Our central case is a hard landing by the end of '23," Druckenmiller said at CNBC's Delivering Alpha Investor Summit in New York City Wednesday. "I will be stunned if we don't have recession in '23. I don't know the timing but certainly by the end of '23. I will not be surprised if it's not larger than the so-called average garden variety."
Home Depot, Boeing lead Dow higher
All but one of the 30 Dow stocks are now in positive territory as the market average is up 600 points on the day.
Home Depot is the best performer in the Dow, up more than 5%. Construction stocks could be a beneficiary of national disasters, like the hurricane that hit Florida on Wednesday.
Other top performers include Boeing, up 4.8%, and Disney, up 3.8%.
The lone decliner is Apple, down 1.3%.
Stocks making the biggest moves midday
These companies are making headlines in midday trading.
- Apple — Apple shares fell 3.4% on Wednesday following a report that the company is ditching plans to boost new iPhone production. Instead of aiming to increase output by 6 million units in the second half of the year as it had planned, it will shoot for 90 million units, unchanged from the prior year, according to Bloomberg.
- Biogen — Shares of the biopharmaceutical company soared 37% following upbeat results from its experimental Alzheimer's drug study and a slew of upgrades from analysts. Biogen and its Japanese partner Eisai said the drug reduced cognitive decline by 27% and slowed the progression of the disease.
- Broadridge — Spruce Point Capital Management issued report containing a strong sell opinion, saying it sees as much as 75% downside risk.
— Tanaya Macheel
10-year Treasury yield drops the most since 2020
The yield on the benchmark 10-year Treasury note dropped the most since 2020 on Wednesday, despite briefly topping 4% earlier in the session, after the Bank of England announced a bond-buying plan to stabilize the British pound.
The 10-year Treasury yield last dropped 23 basis points to 3.733%, or the most it's dropped since 2020.
It hit a high of about 4.019%, a key level that was the highest since October 2008, earlier in the day before erasing those gains.
Yields and prices move in opposite directions. One basis point is equal to 0.01%.
— Sarah Min
Stocks hit session highs midday as British pound rises
Stocks hit session highs in midday trading, with the Dow Jones Industrial Average up more than 400 basis points, as the British pound recovered.
The British pound reached a session high of $1.0875 against the dollar, up about 1%, around noontime Wednesday after falling to as much as $1.0541 earlier in the session.
Those moves come after the Bank of England said it would buy long-dated bonds as a temporary measure to stabilize the currency.
— Sarah Min
Investors should buy stocks now, not wait for market bottom, Rubenstein says
Investors shouldn't be afraid of snapping up stocks trading at a discount now, even if the market may have a bit further to fall, David Rubenstein said during CNBC's Delivering Alpha Investor Summit Wednesday.
That's because stocks are much closer to the bottom than they are to the top, The Carlyle Group co-founder said.
"It's a fools' errand to find the bottom in the market or the top in the market," he said. "Trying to wait to the absolute bottom is probably a mistake, in my view."
There are investing opportunities everywhere right now, says JPMorgan's Erdoes
Staying invested in this turbulent market means finding the right opportunities.
"There is alpha everywhere," Mary Callahan Erdoes, JPMorgan Asset & Wealth Management CEO, said at CNBC's Delivering Alpha Investor Summit in New York City Wednesday. "It's in stocks. It's in bonds. It's in currencies. It's in real estate. It's in private markets. It's in public markets. It's everywhere, because we are in such a state of change."
Erdoes likes U.K. banks, saying they might be "the most interesting thing you can invest in."
"Last week people said don't invest in a single thing in the U.K. That is exactly when people like us, and people in the room, think, 'Let's go look right there,‴ she said.
To read more of her investing ideas from the Delivering Alpha Summit, as well as those of her fellow panelists, click here.
— Michelle Fox
Market can't count on short-covering help, Strategas says
While the stock market attempts to rally after a dramatic sell-off, it is unlikely to get significant help from hedge funds covering their short positions, according to Strategas.
When stocks fall dramatically, there can sometimes be short-term relief as big funds that bet against the stock close out those positions, creating a short-term buying bump. But strategist Chris Verrone said in a note to clients on Wednesday that the market's biggest stocks do not have much short interest, limiting the benefit of any short covering.
"We were asked by a client yesterday if a 'short covering rally' was likely from here – the market is certainly very short-term oversold, but there's really not much short interest among the high profile names (MSFT 0.6% of float, AMZN 0.9%, PG 0.6%, HD 0.9%, MA 0.5%, etc.)," the Strategas note said.
Other notable stocks with short interest below 1% include Apple, Berkshire Hathaway, UnitedHealth Group, Exxon Mobil and Coca-Cola, according to Strategas.
— Jesse Pound, Michael Bloom
Eli Lilly notches all-time high, 33 S&P 500 stocks hit fresh lows
At least 33 stocks notched fresh lows in early morning trading on Wednesday while shares of Eli Lilly traded near all-time highs dating back to 1952.
Here are some of the names that hit fresh lows:
- Paramount trading at lows not seen since May 2020
- Warner Bros. Discovery trading at lows not seen since July 2009
- Caesars Entertainment trading at lows not seen since August 2020
- Domino's Pizza trading at lows not seen since April 2020
- Hasbro trading at lows not seen since May 2020
- YUM Brands trading at lows not seen since March 2021
- Church & Dwight trading at lows not seen since June 2020
- Kraft Heinz trading at lows not seen since February 2021
- Kimberly-Clark trading at lows not seen since March 2020
- Mondelez trading at lows not seen since March 2021
- McCormick trading at lows not seen since April 2020
- Altria trading at lows not seen since February 2021
- Tyson Foods trading at levels not seen since February 2021
- Walgreens Boots Alliance trading at lows not seen since November 2012
- Abbott Labs trading at lows not seen since July 2020
- Organon trading at all-time lows back to its spin-off from Merck in June 2021
- Intel Corporation trading at lows not seen since August 2015
- MasterCard trading at lows not seen since October 2020
- Qualcomm trading at lows not seen since October 2020
- Digital Realty Trust trading at lows not seen since December 2016
- Visa trading at lows not seen since May 2020
— Chris Hayes, Samanth