Wall Street stocks closed higher on Wednesday, holding onto early gains after a temporary dip in oil prices and bond yields reversed following US President Donald Trump's renewed threats against Iran.

Stocks have dropped and government bond yields have hit fresh multi-decade highs in recent days, as elevated oil prices increase the prospect of sustained higher levels of inflation and central banks hiking interest rates in reaction.

But the yield on the 10-year US government bond dipped ahead of the open in New York and oil prices turned briefly lower, helping Wall Street's main indices bounce back in morning trading.

"The market is enjoying a broader rebound... as relative stability in crude oil and Treasury yields has eased some of the pressure that drove the week's early losses," said Briefing.com in a note.

Jose Torres of Interactive Brokers said that messaging from US leaders on the interest rate outlook and bond yields was "boosting investor sentiment, which has faced significant headwinds in recent sessions."

Wall Street held onto its gains even after bond yields and oil prices resumed their march higher.

US-listed stocks of Uber rose more than 1.5 percent on Wednesday after the ride-hailing giant said it was laying off about 10 percent of its workforce.

Europe's main stock markets closed lower.

Bond yields and oil prices have risen since a weekend US strike on an Iranian island in the Strait of Hormuz, sparking a series of tit-for-tat attacks in which Tehran has targeted American interests in Middle East countries.

With the strait – through which about a fifth of world oil and liquefied natural gas normally pass – effectively closed and energy costs unlikely to come down markedly anytime soon, fears are growing that high inflation will settle in.

European gas prices on Wednesday reached the highest level since the start of 2023.

Investors expect that the US Federal Reserve will raise interest rates later this month to fight inflation, putting upward pressure on bond yields.

Key data on US jobs and inflation over the next week could determine the Fed's decision.

Data from payroll firm ADP showed private-sector jobs growth in August was 38,000, down from the month before and well below the 47,000 predicted by economists polled by Dow Jones Newswires and The Wall Street Journal.

The Fed on Wednesday flagged that while the country's general economic outlook was positive, heightened uncertainty due to high energy prices and the Iran war was weighing on sentiment.

And Canada's central bank left its benchmark interest rate unchanged at 2.25 percent for the seventh straight time, but warned of possible consequences from the trade war with the United States.

The S&P 500 rose 0.5 percent, to 7,667, the Dow rose 0.6 percent, to 53,062, while the Nasdaq rose 0.5 percent, to 26,218. (AFP)



Edited by Robert Kemp