US stocks steady after bout of volatility

US stocks found their feet overnight as investors recovered from three sessions of volatility and looked to the Fed.

Stocks and bonds steadied Wednesday after three sessions of swings.

Major U.S. indexes pulled back in afternoon trading, but the moves were small compared with the past few days.

Markets turned choppy late last week, with both stocks and long-dated government debt dropping on uncertainty over global-central-bank policy. The S&P 500 fell 2.5 per cent Friday, rose 1.5 per cent Monday and fell 1.5 per cent Tuesday.

The Federal Reserve and the Bank of Japan hold meetings next week, and investors are looking for clarity on how long ultra-easy monetary policy will continue and what it will mean for a rally that has sent the S&P 500 to highs and global government debt to record-low yields earlier this summer.

“We are doing nothing until we get through the Fed,” said Tom Carter, managing director at brokerage JonesTrading. “There’s a lot of cash sitting on the sidelines until they make a decision.”

The Dow Jones Industrial Average fell 31.98 points, or 0.2 per cent, to 18034.77, after rising as much as 97 points earlier in the session. The S&P 500 declined less than 0.1 per cent. The Nasdaq Composite rose 0.4 per cent.

Energy, the year’s top performing S&P 500 sector heading into this week, led declines for a second straight day as oil prices fell. Energy shares fell 1.1 per cent and U.S. crude oil declined 2.9 per cent to $43.58 a barrel after weekly data showed rising U.S. stockpiles of refined products.

Tech shares rose. Apple, which unveiled its latest iPhones last week, gained 3.6 per cent, a day after it was the only gainer in the Dow industrials during a broad sell-off. On Tuesday, T-Mobile US and Sprint issued news releases suggesting strong consumer interest in the new phones.

Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said stocks were likely to move sideways into October, when the next set of earnings begin.

“Complacency was way too high leading up to the last couple of months, so I think the volume we’ve seen is somewhat justified, but I also think it’s premature to suggest this bull market run is over,” he said.

U.S. government bonds rebounded.

The yield on the 10-year U.S. Treasury note pulled back to 1.689 per cent from 1.732 per cent late Tuesday, when it touched its highest level since the June 23 U.K. referendum on leaving the European Union. Yields move inversely to prices.

A broad sell-off in government bonds kicked off Thursday when the European Central Bank surprised some investors by not announcing fresh stimulus measures or committing to an extension of its bond-buying program beyond next March.

The Stoxx Europe 600 fell 0.1 per cent, its fifth straight session of declines. In Asia, bank shares led Japan’s Nikkei Stock Average 0.7 per cent lower.

Daniel Huang and Aaron Kuriloff contributed to this article.

Dow Jones