Why did stocks finish higher with oil still near $91?
Wall Street snapped a three-day skid as yields eased off multiyear highs, even while crude held above $90 and diesel stayed near its wartime peak.
U.S. stocks snapped a three-day losing streak Wednesday even though oil stayed elevated and Treasury yields only eased after setting multiyear highs.
The S&P 500 rose 0.5%. The Dow Jones Industrial Average gained about 0.6%, or nearly 300 points. The Nasdaq Composite also advanced 0.5%, according to Associated Press and CNBC closing tallies. The rebound followed a rough start to September, when rising crude and a global bond selloff pulled the major averages lower for three straight sessions after a mostly positive August.
The relief was real, but conditional. The 10-year Treasury yield touched 4.818% earlier Wednesday — its highest level since November 2023 — before finishing a little softer near 4.78%. The 2-year yield hit 4.41%, the highest since January 2025, then also came off its peak. Abroad, German 10-year yields were around 3.38%, the highest since 2011, Japan's 10-year held above 3% for the first time in three decades, and British gilts marked a post-2008 high near 5.25% before retreating slightly.
Oil did not break the market by itself, but it did not vanish either. West Texas Intermediate settled just above $91 a barrel, up about 0.9%. Brent closed near $95.63, up about 1%, after the U.S. and Iran traded fresh strikes around the Strait of Hormuz. Energy Secretary Chris Wright told CNBC that more than 17 million barrels moved through Hormuz on Monday, a wartime high still below the roughly 20 million barrels a day that passed before the war. Iran claimed two tankers hit mines; U.S. Central Command called that claim disinformation. For households and small businesses, diesel is the sharper edge: AAA's nationwide average reached $5.69 a gallon, just below the April wartime peak.
New York Fed President John Williams offered the day's key policy frame. He told CNBC the yield surge largely reflects a strong U.S. economy and AI-related investment, not market dysfunction, and said inflation expectations remain well anchored. He did not commit to a September rate hike. Soft private payrolls from ADP — only 38,000 jobs in August — left a cautious undertone heading into Friday's official report.
Under the surface, the tape stayed split. Energy held up with crude. Rate-sensitive pockets such as homebuilders, transports, and airlines recovered some ground but remain exposed if the 10-year retests its highs or diesel keeps climbing. Big tech helped lead the bounce, and Broadcom later offered a strong AI-demand message after the bell.
What would break the rebound is another leg higher in oil and yields, a clear Fed hike signal, or fresh Hormuz disruption that pushes freight costs back into grocery and construction bills. What would extend it is a genuine settle in the 10-year, oil holding without another jump, and payrolls that cool inflation fears without collapsing demand.