Soaring energy prices retreated and stocks on Wall Street rebounded on Wednesday after the top U.S. Senate Republican backed an extension of the U.S. debt ceiling and Russia calmed volatile natural gas markets in Europe.
The unrelated moves eased growing angst among investors about a possible historic default on U.S. government debt and surging Dutch wholesale gas prices, the European benchmark, that had jumped eightfold this year to record highs. U.S. natural gas futures plunged more than 10%, a day after they soared to a 12-year high.
Yields on one-month Treasury bills tumbled after Senate Minority Leader Mitch McConnell said his party would support an extension of the federal debt ceiling into December. Republicans had been expected on Wednesday to block a third attempt by Senate Democrats to raise the $28.4 trillion federal debt ceiling.
“There was a lot of nervousness that time was running out on debt ceiling talks,” said Edward Moya, senior market analyst at OANDA in New York.But the primary catalyst for the day’s volatile market moves were the Russian decisions on natural gas, Moya said.
“The global energy crisis was becoming a focal point for inflation concerns,” Moya said. Earlier, a strong private payrolls report helped boost expectations that the U.S. Federal Reserve would soon taper its massive bond purchases.
