Stocks staged a big comeback Wednesday after the Bank of England announced a bond-buying plan to stabilize markets, and Treasury yields tumbled from multi-year highs.
Currency markets abroad were in the spotlight for investors. The British pound recovered after the Bank of England said it would temporarily purchase long-dated UK government bonds to stabilize its currency.
Meanwhile, the yield on the 10-year U.S. Treasury dropped the most it had since 2020 after briefly touching a key 4% level earlier in the day.
"This looks to me like the market breathing a sigh of relief that interest rates have come back down at least for today," Tim Courtney, CIO of Exencial Wealth Advisors, wrote in a note.
Still, some investors worry that markets have not adequately priced in lower earnings expectations and the impact of aggressive interest rate hikes from the Federal Reserve.
"Our central case is a hard landing by the end of '23," Stanley Druckenmiller said at CNBC's Delivering Alpha Investor Summit in New York City on Wednesday. "I will be stunned if we don't have recession in '23. I don't know the timing but certainly by the end of '23. I will not be surprised if it's not larger than the so-called average garden variety."
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