(Updated prices after U.S. stock market close)
Equities around the world rebounded on Tuesday from the previous day's aggressive sell-off while Treasury yields rose and the dollar was slightly higher as investors ventured back into risk assets and central banker comments soothed recession fears.
Oil prices settled higher on Tuesday after hitting multi-month lows on Monday, as investor attention turned to supply tightness while financial markets bounced back, easing worries about the outlook for energy demand.
Earlier the Nikkei's .N225 roughly 10% rebound in Tokyo brought some relief after the index's 12.4% drop on Monday kicked off a global rout with the Japanese benchmark's biggest one-day sell-off since the 1987 Black Monday crash.
The S&P 500 .SPX had lost 3% on Monday, while the Nasdaq .IXIC slumped 3.43%, extending a recent sell-off as fears of a possible U.S. recession spooked global markets.
U.S. Federal Reserve policymakers pushed back on Monday against the notion that weaker-than-expected July jobs data means the economy is in a recessionary freefall.
Late on Monday San Francisco Fed President Mary Daly said the jobs report leaves "a little more room for confidence that we're slowing but not falling off a cliff." But she said it was "extremely important" to keep the jobs market from falling over.
"The question investors are grappling with is whether we're hitting an economic air pocket or whether it's a head fake ... It was a single monthly jobs report so you'd want to be careful about reading too much into it," said Scott Helfstein, head of investment strategy at Global X.
"In the absence of economic data this week, what the market has to work through is whether we keep bouncing around or do we settle in and be patient for more information," he added.
On Wall Street the Dow Jones Industrial Average .DJI rose 294.39 points, or 0.76%, to 38,997.66, the S&P 500 .SPX gained 53.70 points, or 1.04%, to 5,240.03 and the Nasdaq Composite .IXIC gained 166.77 points, or 1.03%, to 16,366.86.
MSCI's gauge of stocks across the globe .MIWD00000PUS rose 8.91 points, or 1.17%, to 770.99, below its 777.81 session high. This was after the index fell more than 3% on Monday for its third straight day of losses.
Europe's STOXX 600 .STOXX index earlier closed up 0.29% in a volatile session during which it fell as much as 0.54%.
In currencies, the dollar recovered against major peers and the Japanese yen steadied around 7-month highs against the U.S. currency as some of the most striking moves of recent days reversed somewhat and a semblance of calm returned to markets.
The dollar index =USD , which measures the greenback against a basket of currencies including the yen and the euro, gained 0.07% at 102.94.
Against the Japanese yen JPY= , the dollar strengthened 0.4% to 144.74 while the euro EUR= was down 0.2% at $1.093.
U.S. Treasury yields rose as fears that the U.S. economy is quickly entering a recession were seen as overdone, while safe-haven demand for U.S. bonds also ebbed as stocks recovered.
The yield on benchmark U.S. 10-year notes US10YT=RR rose 12 basis points to 3.903%, from 3.783% late on Monday. The 30-year bond US30YT=RR yield rose 12.1 basis points to 4.1924%.
The 2-year note US2YT=RR yield, which typically moves in step with interest rate expectations, rose 10.9 basis points to 3.9936%, from 3.885% late on Monday.
Oil prices recovered after selling off on Monday. U.S. crude CLc1 settled up 0.36% at $73.20 a barrel while Brent LCOc1 finished at $76.48 per barrel, up 0.24% on the day.
In precious metals, gold prices fell as the dollar firmed and bond yields rose, although expectations of a U.S. rate cut in September and escalating Middle East tensions limited losses.
Spot gold XAU= lost 0.82% to $2,387.88 an ounce. U.S. gold futures GCc1 fell 0.37% to $2,392.70 an ounce.
