Oct 24, 2023 5 min read

NEW YORK (AP) – Wall Street rose to a rare gain Tuesday after Verizon, General Electric and other big companies reported fatter profits for the summer than expected.

The S&P 500 climbed 30.64, or 0.7%, to 4,247.68 to break a five-day losing streak. The Dow Jones Industrial Average gained 204.97 points, or 0.6%, to 33,141.38, and the Nasdaq composite rose 121.55, or 0.9%, to 13,139.87.

Verizon jumped 9.3% after saying it increased its number of broadband subscribers by 20% and earned more than analysts expected during the summer.

General Electric rallied 6.5% after delivering better-than-expected earnings and raising its profit forecast for the year. much higher yields in the bond market.

The 10-year Treasury yield has been rising rapidly from less than 3.50% in the spring and catching up with the Federal Reserve’s main overnight interest rate, which is at its highest level since 2001. The Fed has yanked its federal funds rate above 5.25% in hopes of starving high inflation of its fuel, and it’s indicated plans to hold the rate at a high level for a while.

High yields hurt prices for stocks, cryptocurrencies and other investments. They also slow the economy bluntly and add stress for the entire financial system.

But the 10-year Treasury yield was easing Tuesday after hitting its highest level since 2007 a day before. The 10-year yield was at 4.82%, down from 4.85% late Monday. Another drop in oil prices helped to ease the pressure on inflation.

Some investors have recently begun saying yields may not have much higher to go.

“From here, our view is that we are now close to the peak in yields,” said Solita Marcelli, chief investment officer Americas of UBS Global Wealth Management.

She said that if yields were to move much higher at a quick pace, it would risk hurting the Treasury market and shake the financial system’s stability. She said the Federal Reserve could step in to help the market like it did in March, when high interest rates helped cause three high-profile collapses of U.S. banks.

To be sure, even if rates and yields climb no further, they’re still high enough that some investors are worried they’ll eventually drag the economy into a recession if the Fed holds pat.

Until now, the overall economy has remained remarkably resilient in the face of much higher interest rates. A solid job market and spending by U.S. households has helped keep the economy chugging along.

Strong data reports recently have driven expectations for the U.S. economy’s growth in the third quarter of the year sharply higher. Economists at Goldman Sachs, for example, have raised their forecast for the quarter’s growth to 4.6% from just 1.5% in mid-August.

A preliminary report on Tuesday said business activity is strengthening in October by more than economists expected. The report from S&P Global indicated demand for manufacturers improved for the first time since April.

While such strength has prevented a recession, it could also be giving inflation fuel and encouraging the Fed to keep rates high for longer. That in turn could lead to more weakness in the future.

Some warning signals are also lying within the strong run of corporate profit reports.

Hamas-Israel war could lead to disruptions in supplies from Iran or other big oil-producing countries.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.