Equity Markets Rebound; Yields Jump

US benchmark equity indexes closed higher Tuesday following steep losses in the previous two sessions, while Treasury yields posted sizable gains.

The S&P 500 rose 1% to 5,240, and the Nasdaq Composite rose 1% to 16,366.9. The Dow Jones Industrial Average advanced 0.8% to 38,997.7. All sectors posted gains, led by real estate.

Stock markets posted sharp declines on Friday and Monday, triggered mainly by a weaker-than-expected US jobs report for July. The report on Friday stoked recession fears.

The market has priced "aggressive" cuts in interest rates by the Federal Reserve following recent jobs data, Morgan Stanley said Tuesday in a note. "We maintain a call for (75 basis points) of cuts this year on a view that the economy is not slumping."

The US 10-year yield jumped 11.5 basis points to 3.9%, while the two-year rate added 9.6 basis point to 3.98%.

San Francisco Fed President Mary Daly said she's "more confident" that inflation in the US is headed toward the Federal Open Market Committee's 2% target, Reuters reported Monday.

In company news, Kenvue (KVUE) shares jumped 15%, the biggest gain on the S&P, after the company's Q2 financial results topped Wall Street's views.

Uber Technologies (UBER) shares gained 11%, the second-largest increase on the S&P, after the ride-hailing company logged stronger-than-expected gains in Q2 results amid robust demand.

Caterpillar (CAT) shares rose 3%, the top gain on the Dow, after the heavy equipment manufacturer's q2 Earnings unexpectedly rose while revenue fell. The company lowered full-year revenue expectations.

Henry Schein (HSIC) shares slumped 8.1%, the steepest decline on the S&P, as the company lowered its full-year earnings outlook following a Q2 revenue miss.

West Texas Intermediate crude oil rose 0.1% to $73.03 a barrel.

In economic news, the US trade deficit narrowed less than projected in June even as export growth outpaced an increase in imports, according to government data.

Gold fell 0.6% to $2,429.10 per troy ounce, while silver decreased 0.3% to $27.12 per ounce.