GLOBAL MARKETS-U.S. stocks jump 2% after recent selloff; yen drops vs dollar

BY Reuters | TREASURY | 06/21/22 04:25 PM EDT

* S&P 500 ends up more than 2%

* U.S. Treasury yields rise

* Yen plunges against dollar

* Crude oil settles higher (Updates with late U.S. market levels)

By Caroline Valetkevitch

NEW YORK, June 21 (Reuters) - Stocks on global indexes rose sharply on Tuesday, with major U.S. stock indexes each ending up more than 2% following a recent selloff, while the Japanese yen fell against the U.S. dollar to its lowest level since October 1998.

Wall Street climbed as participants returned from a long weekend, with investors buying up shares of megacap growth and energy companies hit last week by global economic worries.

Energy shares climbed along with oil prices. Oil gained on high summer fuel demand.

"After back-to-back weeks of 5% declines, you've pushed the ball under the water far enough now that we're getting a bounce," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

But, Nolte said, "interest rates are still going higher. Oil is still going higher."

Expectations of interest rate hikes from major central banks and worries about a global recession have kept investors on edge. Central banks are expected to tighten policy to combat high inflation.

The Dow Jones Industrial Average rose 641.47 points, or 2.15%, to 30,530.25, the S&P 500 gained 89.95 points, or 2.45%, to 3,764.79 and the Nasdaq Composite added 270.95 points, or 2.51%, to 11,069.30.

The pan-European STOXX 600 index rose 0.35% and MSCI's gauge of stocks across the globe gained 1.83%.

U.S. Treasury yields were higher as the risk-off mode that weighed on U.S. markets last week took a breather.

Benchmark 10-year yields were at 3.305%, up from their 3.239% close at the end of last week.

All eyes are now on Fed Chair Jerome Powell's testimony to the Senate Banking Committee on Wednesday for clues on rates.

Goldman Sachs has said it now thinks there is a 30% chance of the U.S. economy tipping into a recession over the next year, up from its previous forecast of 15%.

In the foreign exchange market, the Japanese yen plunged against the U.S. dollar to 136.330 per dollar.

Japanese Prime Minister Fumio Kishida said the central bank should maintain its current ultra-loose monetary policy. This makes it an outlier among other major central banks.

Brent crude futures rose 52 cents, or 0.5%, to settle at $114.65 a barrel. The U.S. West Texas Intermediate (WTI) crude contract for July expired on Tuesday, closing at $110.65, with a gain of $1.09, or 1%. The more active August contract was up $1.53 at $109.52.

Spot gold dropped 0.3% to $1,832.27 an ounce.

(Additional reporting by Elizabeth Howcroft in London; also by Devik Jain and Anisha Sircar; Editing by Louise Heavens, Chizu Nomiyama, Will Dunham and Mark Heinrich)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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