- Bank of Japan policy change knocks global sentiment
- Tesla stock fell 8% after brokerage firms downgraded PT
- Energy stocks led the gains supported by Crude Oil
- Indices rose: Dow 0.28%, Standard & Poor’s 0.10%, Nasdaq 0.01%
Dec. 20 (Reuters) – Wall Street closed slightly higher on Tuesday after four sessions of declines, but investors worried about weak holiday shopping and rising bond yields added pressure after a surprise monetary policy adjustment from the Bank of Japan.
Concerns about the Federal Reserve’s plan to continue raising US interest rates have weighed heavily on stocks since last week’s policy meeting.
Adding to the pressure was an increase in US Treasury yields after the Bank of Japan made a surprise adjustment to control yields, allowing long-term interest rates to rise further.
“The BoJ news moved the bond market and its impact continues,” said Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance, Charlotte, North Carolina.
Investors were also concerned about the current quarter’s earnings season and winter holiday shopping.
“We came to it with some very reasonable expectations but retailers have to do huge sales,” said Carol Schliffe, vice president of investment for BMO’s family office in Minneapolis, Minnesota, noting that this year consumers are trending “services and events — vacations — restaurant tickets and gift certificates And things like that — unlike another jacket or another bag.”
Schleif noted that investors are worried after a volatile year for equities, with the Standard & Poor’s Index on track for its biggest annual drop since the 2008 financial crisis.
“People have their heads turned to them all year long and they’re not confident enough to want to get involved,” she said.
“That’s what leads me to kind of catch a market where it’s going up a little bit and it’s really difficult for any segment of the investing public to want to write a story where they’re going to put a whole bunch of money behind.”
The Dow Jones Industrial Average increased 92.2 points, or 0.28%, to 32,849.74 points, the Standard & Poor’s 500 increased 3.96 points, or 0.10%, to 3,821.62 points, and the Nasdaq Composite Index increased 1.08 points, or 0.01%, to 10,547.11.
Among the 11 major sectors of the S&P 500, the Energy Index (.SPNY) rose 1.52% as crude oil prices rose.
Of the four sectors that fell, consumer appreciation (.SPLRCD) was the weakest, ending down 1.13%.
The Dow Jones Transport (.DJT) closed down 1.3% after the broader market underperformed throughout the session following JPMorgan’s bearish research on carriers.
FedEx Corp (FDX.N) closed down 2.6% ahead of its quarterly report. But shares in the delivery company, which spooked the entire market in September by withdrawing its financial outlook, last rose more than 3% on choppy after-bell trading after its fiscal second-quarter report and 2023 guidance.
In fixed income, US Treasury rates fell after the Bank of Japan’s surprise move, with the 10-year Treasury yield rising to a three-week high of 3.71%.
Also on Tuesday, data showed that single-family home construction in the United States fell to a 2-1/2 year low in November, and future building permits fell as higher mortgage rates continued to dampen housing market activity.
Shares of General Mills Inc (GIS.N) fell 4.6% after its quarterly sales for the high-margin pet business took a hit as major retailers cut inventory, overshadowing the increase in its full-year earnings and sales outlook.
Shares of Tesla Inc (TSLA.O) fell 8% after at least three brokerages cut their price target for the electric car maker amid growing concerns about weak demand and risks from CEO Elon Musk’s Twitter grievances.
Wells Fargo & Co (WFC.N) fell 2% after US regulators fined the lender $3.7 billion, citing widespread mismanagement of auto loans, mortgages and deposit accounts.
Advance issues outnumbered declining issues on the NYSE by a ratio of 1.12 to 1; On the Nasdaq, a ratio of 1.06 to 1 favored the bulls.
The S&P 500 hit a new 52-week high and 14 new lows; The Nasdaq Composite Index posted 64 new highs and 399 new lows.
10.52 billion shares changed hands on US exchanges, compared to an average of 11.15 billion shares for the last 20 trading days.
Additional reporting by Shubham Batra, Yohan M Cherian and Sruthi Shankar in Bengaluru; Editing by Magu Samuel, Anil D’Silva, and David Gregorio
Our Standards: The Thomson Reuters Trust Principles.
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