US stocks climbed Wednesday after the Bank of England announced it would backstop the UK Gilt market, leading Treasury yields to fall from their highest levels in over a decade.
The Dow Jones Industrial Average jumped 1.9% to 29,683.74 and the S&P 500 climbed 2% to 3,719.04. Both indices had fallen to their lowest levels this year earlier this week, entering bear market territory. The Nasdaq Composite advanced 2.1% to 11,051.64.
All sectors were in the green, led by energy and communication services.
The US 10-year yield sank 25.9 basis points to 3.705%, retreating from its highest point in more than 10 years. The two-year rate dropped 18.7 basis points to 4.121%, declining from its strongest since 2007.
Citing the possibility of material risk to UK financial stability because of disorderly selling in the gilt market, the Bank of England on Wednesday announced it would backstop markets and "restore market function," according to a Berenberg note.
The Bank of England, which plans to purchase government bonds to "whatever scale is necessary," also postponed the start of its bond-selling program to tighten financial conditions in the country. The pound appreciated 1.4% against the dollar to 1.088 intraday, after depreciating to a record low earlier this week as the UK government unveiled a program of tax cuts.
In other economic news, mortgage applications in the US returned to contraction territory last week as interest rates soared, the Mortgage Bankers Association said Wednesday. The market composite index, which measures loan application volume, declined 3.7% for the week ended Sept. 23 after rising a week earlier for the first time in the prior six weeks.
West Texas Intermediate futures advanced 4.4% to $81.95 a barrel. Excluding inventories in the Strategic Petroleum Reserve, commercial crude oil stocks slipped by 200,000 barrels in the week ended Sept. 23 after a 1.1 million barrel increase in the previous week, below a 2-million barrel increase expected in a survey compiled by Bloomberg.
In company news, Biogen (BIIB) said lecanemab, an investigational Alzheimer's disease treatment, met its primary endpoint and all key secondary endpoints in a phase 3 trial, driving analysts to upgrade the stock's rating and raise its price target. Shares of the healthcare firm surged 40%, the top performer on the S&P 500 and the Nasdaq 100.
The worst performer on the Dow was Apple (AAPL), with shares down 1.3%. It was also among the steepest decliners on the S&P 500. Wedbush reiterated its outperform rating and $220 price target on Apple but said the company's decision not to increase iPhone 14 production is negative and overshadows the underlying story for iPhone 14 Pro demand currently playing out in the field.
Gold was up 2% to $1,667.90 per troy ounce, and silver was up 3% to $18.90 per ounce.