Stocks head higher amid rocky stretch

U.S. stocks were trading higher in early trading following a steep drop Tuesday and a three-session bout of heightened volatility sparked by fears of rising interest rates.

The Dow Jones industrial average was 60 points higher, or 0.3%, after being up as much as 96 points earlier in the day. The blue chip stock gauge has been on a wild ride the past three trading days, tumbling 258 points on Tuesday, following a nearly 240-point rally Monday and a nearly 400-point drop last Friday.

In a sign of rising volatility, or wild stock price swings, the Dow has now finished lower by more than 1% two of the past three sessions, after going the entire month of July and August without a 1% setback.

The Standard & Poor's 500 was 0.4% higher and the Nasdaq composite was up 0.7% early Wednesday.

Investors have been jittery of late. Worries include fears that higher interest rates will hurt the economy, overvalued stock prices and continued uncertainty over the presidential election and the strength of the economy. The biggest weight on the economy has been rising concern that the U.S. stock market and other financial assets have been artificially inflated due to the easy-money policies of central bankers. That has boost fears of a price correction to get prices better aligned with business fundamentals, such as corporate earnings and the slower growth rate of the U.S. economy.

U.S. government bond yields, which have spiked to their highest levels since late June following Britain's vote to exit the European Union, were lower early Wednesday, providing a boost to stocks as it offset fears of a sharp jump in long-term rates. The yield on the 10-year Treasury note was 1.693%, down from Tuesday's level of 1.729%. Yields, which move in the opposite direction of price, have jumped roughly 20 basis points from an intraday low of 1.516% a week ago. The sharp rise in long-term bond yields is another headwind giving stock and bond investors pause.

A sense of negativity has overcome the stock market since the trading community returned from the long summer vacation. A calm summer of trading that saw the S&P 500 drift to another record high on Aug. 15 has given way to talk of a possible pullback in prices. Currently, after Tuesday's 1.5% drop to 2127.02, the S&P 500 is down almost 3% from its all-time closing high of 2190.15.

Oil prices, which fell 3% on Tuesday and was a factor in the steep slide in stock prices, turned higher after earlier weakness. A barrel of U.S.-produced crude was up 11 cents, or 0.2%, to $45.01 per barrel.

Stocks around the globe were mixed and showed signs of stabilization. The broad Stoxx Europe 600 index was 0.3% higher, with shares up in Germany but lower in France.

In Asia, Japan's Nikkei 225 index closed 0.7% lower. Hong Kong's Hang Seng index fell 0.1% and shares of the Shanghai composite in mainland China fell 0.7%.

 


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