Stocks rose on Tuesday as Wall Street shrugged off a rise in global bond yields following a surprise move by the Bank of Japan. Investors also ignored concerns that a year-end rebound might not materialize.
The Dow Jones Industrial Average rose 153 points, or 0.47%. The S&P 500 and Nasdaq Composite gained 0.30% and 0.16%, respectively.
Overnight on Tuesday, the Bank of Japan raised the cap on 10-year Japanese government bond yields, catching global traders off guard. That added to pressure from other hawkish central banks, with the European Central Bank and Federal Reserve both raising interest rates last week, stoking recession fears.
“More than 90% of central banks have already raised rates this year, making (mostly) global coordinated action unprecedented,” said Lawrence Gillum, fixed income strategist at LPL Financial. “The good news? We think we’re near the end of these rate hike cycles, which could would mitigate the headwinds we’ve seen in global financial markets this year.”
The Dow Jones Industrial Average fell more than 162 points, or about 0.5%, on Monday. The S&P 500 fell 0.9 percent and the Nasdaq Composite lost nearly 1.5 percent. With stocks on track to end the month and year in the red, investor hopes for a Santa Claus rally are fading fast. The Dow is down 5.3% so far this month, the S&P 500 is down 6.43% and the Nasdaq is down more than 8%.
“Still haven’t seen Santa. Buckle up,” said Louis Navellier, founder of growth investment firm Navellier & Associates. “One might think that all the bad news has already arrived. The Fed won’t do much more until February at the earliest. We didn’t gap but certainly not recovering last week’s losses.”
A handful of big companies will report quarterly results in the week before the Christmas holiday. Nike and FedEx are to report after the close.
This week promises to have a lot of insight into the real estate industry. Data on existing home sales and new home sales are due on Wednesday and Friday, respectively.
The November report on personal consumption expenditures, the Fed’s preferred measure of inflation, is due on Friday.