U.S. stocks opened higher on Wednesday, recovering from the prior day’s losses, as higher yields and energy prices remained in focus ahead of Friday’s jobs report.
“The most important thing to me is what’s causing people to sell bonds,” said Art Hogan, chief market strategist at Wunderlich Securities. “The 10-year moving higher (adds to) the picture the global economy is improving and that’s going to factor itself into the market at some point.”
He also noted gains in oil prices, up significantly from their lows, as a market driver.
Oil prices gained more than $1 to hit a fresh 2015 high on Wednesday, continuing a month-long rally that has been supported by a weaker dollar and a disruption to crude exports from Libya.
“I think on the stock market I think it’s probably just a rebound after a down day,” said Stephen Freedman, CIO head of U.S. thematic and sustainable investing strategy at UBS Wealth Management Americas.
U.S. stocks closed about 1 percent lower on Tuesday as investors eyed higher bond yields, mixed domestic data and renewed concerns over Greece. The tech-heavy Nasdaq under-performed, falling about 1.5 percent to close below 5,000.
The ADP Employment Report showed 169,000 jobs were created in April, below expectations.
The report, which could foreshadow Friday’s employment report, was expected to record a modest rise in the rate of job creation to around 200,000 in April, according to analysts.
Unit labor costs for the first quarter rose 5 percent but productivity fell 1.9 percent, a touch more than the expected 1.8 percent decline. The report is central to the Federal Reserve’s assessment of underlying price pressures.
“That’s not a good combination—productivity low and unit labor costs high,” said Peter Cardillo, chief market economist at Rockwell Global Capital. That could “increase inflation down the road.”
Yields on the 10-year U.S. Treasury pared gains to trade around 2.20 on Wednesday, slightly below levels seen Tuesday after major data releases.
“I think it’s a matter of concern if they move too high too fast,” UBS’ Freedman said. “But the adjustment right now is not something I would consider a problem.”
He expects the 10-year yield to rise to 2.4 percent in the next 12 months.
The rise in yields hurt weekly mortgage applications, with total volume falling 4.6 percent on a seasonally adjusted basis for the week ended May 1, according to the Mortgage Bankers Association (MBA).
GlaxoSmithKline reported revenue in line with estimates, but earnings short of forecasts. Glaxo had better than expected results for vaccines and consumer health care, but pharmaceuticals were a drag on profits.
Wendy’s earned an adjusted 6 cents per share for its latest quarter, one cent above estimates, though revenue was below forecasts. The fast food chain also announced plans to sell its bakery operations during this quarter, and will refinance its existing debt.
Mylan reported adjusted quarterly profit of 70 cents per share, one cent above estimates. Revenue was below estimates, impacted by the strong dollar. Activity in Mylan’s stock has been driven recently by a three-way takeover battle in which it is trying to buy Perrigo while fending off a takeover bid from Teva.
News Corp. missed estimates by a penny with adjusted quarterly profit of five cents per share, with revenue essentially in line. The Wall Street Journal owner was hurt by foreign currency issues as well as a drop in newspaper ad sales.
American Express was upgraded to “outperform” from “market perform” at Bernstein, which said the company’s risk/reward is “dramatically skewed” to the upside.
European equities were higher in morning trade on Wednesday as investors reacted to a slew of earnings reports and new economic data.
Wednesday also marks the fifth anniversary of the ‘flash crash’ that sent the Dow Jones industrial average briefly down nearly 1,000 points and remains under investigation.
—CNBC’s Peter Schacknow contributed to this report.
On tap this week:
Earnings: Tesla Motors, Marathon Oil, Sunoco Logistics, Transocean, TripAdvisor, A-B InBev, GlaxoSmithKline, Occidental Petroleum, Chesapeake Energy, HollyFrontier, Motorola Solutions, 3D Systems, SodaStream, Wendy’s, Activision Blizzard, 21st Century Fox, Keurig Green Mountain, WholeFoods, Rayonier , WebMd
10:30 a.m.: DOE oil, gasoline inventories
1:15 p.m.: Kansas City Fed’s Esther George on credit markets panel
1:30 p.m.: Atlanta Fed Dennis Lockhart on monetary policy
Earnings: Alibaba, Orbiz, Time Inc, CBS, Monster Beverage, Zynga, Fortress Investment, SeaWorld, Regeneron, Siemens, Apache, ArcelorMittal, BTGroup, ING Group, Alcatel-Lucent, Norwegian Cruise Line, Nuance Communications, Nvidia, Molson Coors, Apollo Global Management, Elizabeth Arden, Cyber ArkSoftware, Tesoro, Teradata
8:30 a.m.: Weekly jobless claims
8:30 a.m.: PPI
Earnings: Toyota, JD.com, BioCryst Pharma, Liberty Media, AOL, Health Care Reit, NRG Energy, Sirona Dental Systems
8:30 a.m.: Employment report
10:00 a.m.: Wholesale trade