Stocks reverse some gains after a sharp two-day rally on Wall Street, Dow falls 150 points

US stocks fell on Wednesday, returning some of their large gains from the past two sessions as the Treasury yield rose.

The Dow Jones Industrial Average fell 152 points, or 0.5%. The S&P 500 and the Nasdaq Composite fell 0.7% and 1.1% respectively.

Treasury yields bounced back on Wednesday, weighing on stocks. The 10-year rate traded up 10 basis points to 3.713% after briefly dipping below 3.6% in the previous session.

Private payrolls rose by 208,000, ADP said in its latest report, beating a Dow Jones estimate. Traders are still eagerly awaiting Friday’s release of the nonfarm payrolls report.

“Five of the last bear markets since 1950 ended in October,” Sam Stovall, CFRA’s chief investment strategist, told CNBC’s “Squawk on the Street.” However, he added, “I still think we have a way to go. We’ve gone down 25%, but bear markets with recessions usually go down around 35% and do so over a period of 15 months. Although we have these relief rallies, we are likely to continue down into the first quarter of next year.”

On Tuesday, the Dow jumped about 825 points, or 2.8%. The S&P 500 gained nearly 3.1%, while the Nasdaq Composite rose 3.3%. Those gains, which stem from falling bond yields, led to the strongest two-day period for the S&P 500 since 2020.

Market participants wondered if these signs could mean that markets had finally priced in after the steep declines of the previous quarter.

“I don’t think you need to worry about a recession until the second half of 23,” Stifel chief equity strategist Barry Bannister said on CNBC’s “Closing Bell: Overtime” on Tuesday. “So there is room for a rally early next year.”

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