U.S. Stocks Advance, Treasury Yields Rise Following Strong Economic Data, Fed Resolve

Wall Street advanced and Treasury yields touched two-week highs on Wednesday as abating geopolitical concerns, robust economic data and generally upbeat corporate earnings fed investor risk appetite.

All three major U.S. stock indexes were higher, and benchmark 10-year Treasury yields gained ground.

Economic data showed an unexpected acceleration of services activity and a robust increase in factory orders, suggesting that the economy was healthy enough to withstand the hawkish monetary policy from the U.S. Federal Reserve.

St. Louis Fed President James Bullard re-iterated his colleague's vow that the central bank's monetary policy will continue to "be tough" on inflation until it returns to the Fed's average annual 2% target.

Tensions between China and the United States cooled down following U.S. House of Representatives Speaker Nancy Pelosi's visit to Taiwan, which provoked ire from Beijing.

The Dow Jones Industrial Average rose 272.42 points, or 0.84%, to 32,668.59, the S&P 500 gained 41.05 points, or 1.00%, to 4,132.24 and the Nasdaq Composite added 211.29 points, or 1.71%, to 12,560.05.

European stocks followed their U.S. counterparts higher, reversing earlier losses do the mixed earnings and disappointing economic data.

The pan-European STOXX 600 index rose 0.48% and MSCI's gauge of stocks across the globe gained 0.51%.

Emerging market stocks rose 0.04%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.05% higher, while Japan's Nikkei rose 0.53%.

U.S. Treasury yields scaled two-week peaks powered by stronger-than-expected data, which supported recent hawkish comments from Fed officials.

Benchmark 10-year notes last fell 16/32 in price to yield 2.7975%, from 2.741% late on Tuesday.

The 30-year bond last fell 29/32 in price to yield 3.0309%, from 2.984% late on Tuesday.

Oil prices dropped after oscillating in the wake of the OPEC+ group of crude producers announcement that it would increase its production by a mere 100,000 barrels per day, while diplomatic progress revived hopes that sanctions against Iranian oil exports could be removed.

U.S. crude fell 2.39% to $92.16 per barrel and Brent was last at $98.49, down 2.04% on the day.

The dollar took a U-turn and was last higher against a basket of world currencies after economic indicators surprised to the upside.

The dollar index rose 0.5%, with the euro down 0.34% to $1.0129.

The Japanese yen weakened 0.83% versus the greenback at 134.28 per dollar, while Sterling was last trading at $1.2113, down 0.48% on the day.

Gold also reversed course, and was last edging lower as the safe-haven metal's luster faded along with geopolitical tensions.

Spot gold dropped 0.2% to $1,757.16 an ounce.