Wall Street snapped a three-day losing streak Wednesday as a sharp retreat in bond yields and a pullback in oil prices gave investors a reprieve from the market pressure that has built since the start of the war with Iran. The S&P 500 climbed 1.1%, pulling closer to its all-time high set last week. The Dow Jones Industrial Average added 645 points, or 1.3%, and the Nasdaq composite rallied 1.5%.
The catalyst for the broad-based rally was a sudden easing in the bond market, where the yield on the 10-year Treasury note fell to 4.57% from 4.67% late Tuesday. In a market where yields typically move in hundredths of a percentage point, the 10-basis-point drop was a substantial shift. The 10-year yield had been climbing for weeks, rising from below 4% before the U.S.-Iran conflict began, as investors priced in the inflationary effect of sustained high oil prices.
MSI previously reported on this market pattern — the May 19 session also saw stocks recover as bond pressure lifted — and the easing momentum continued Wednesday as oil prices gave back a portion of their recent war-driven gains.
The inflation concerns tied to the Iran conflict have reshaped the Federal Reserve’s policy outlook for the year. Prior to the war, markets had anticipated multiple interest rate cuts in 2026. The sustained rise in oil prices and the corresponding jump in bond yields have not only eliminated the chances for a rate cut this year, the Associated Press reported, but have also heightened the risk that central banks may need to raise rates in 2026 if inflation remains elevated.
The rally was broad based, with all three major U.S. indexes posting solid gains. Technology stocks were among the leaders, with the Nasdaq’s 1.5% gain outpacing the S&P 500 and the Dow.