U.S. stocks rose on Tuesday, regaining some ground after four sessions of declines, as investors fretted about a wide range of factors from holiday shopping and current-quarter earnings to recession fears and the Bank of Japan’s (BoJ) surprise tweak of its monetary policy.
Fears of the impact of rising interest rates on the U.S. economy have weighed heavily on markets after the Federal Reserve struck a hawkish tone at its policy meeting last week.
Adding to those worries, the BOJ made a surprise tweak to its bond yield control that allows long-term interest rates to rise more, a move aimed at easing some of the costs of prolonged monetary stimulus.
“People have gotten their heads handed to them all year and they’re not confident enough to want to step in,” said Carol Schleif, Deputy Chief Investment Officer, BMO family office in Minneapolis, Minnesota.
“That’s what leads to this push me pull you kind of market where it’s up a little down a little and it’s really hard for any segment of the investing public to want to get to want to spin a narrative they would put a whole bunch of money behind.”
Along with broader uncertainty around what the fourth-quarter earnings season will look like, Schleif said investors were concerned about winter holiday-shopping trends this year.
“We came into it with some pretty reasonable expectations but retailers are having to do massive sales,” she said noting that consumers were veering more towards “services and events – vacation tickets and restaurant gift certificates and things like that – as opposed to another sweater or another bag.”
In fixed income U.S. Treasury prices fell following the BOJ’s shock move, with the benchmark 10-year Treasury yield was rising to a three-week high of 3.69%.
Also on Tuesday data showed U.S. single-family homebuilding tumbled to a 2-1/2 year low in November and permits for future construction plunged as higher mortgage rates continued to depress housing market activity.
By 2:17 p.m. ET (1917 GMT), the Dow Jones Industrial Average (.DJI) rose 187.98 points, or 0.57%, to 32,945.52, the S&P 500 (.SPX) gained 14.86 points, or 0.39%, to 3,832.52 and the Nasdaq Composite (.IXIC) added 27.24 points, or 0.26%, to 10,573.27.
Among the S&P 500’s 11 major sectors, energy index (.SPNY) was leading gains, up 1.8%, as crude oil prices rose.
The materials (.SPLRCM) and financials (.SPSY) sectors were the next biggest gainers with banks benefiting from a rise in Treasury yields.
Consumer discretionary (.SPLRCD) was the weakest sector, down 0.5%.
General Mills Inc GIS.N> shares were down more than 4% after quarterly sales at its high-margin pet business took a hit due to some key retailers cutting back on inventory, overshadowing an increase in its full-year earnings and sales forecast.
Tesla Inc (TSLA.O) shares were down almost 6% after at least three brokerages cut the electric vehicle maker’s target price on growing concerns of demand weakness and risk from Chief Executive Elon Musk’s Twitter distraction.
Wells Fargo & Co (WFC.N) slid more than 1% after U.S. regulators fined the lender $3.7 billion, citing widespread mismanagement of auto loans, mortgages and deposit accounts.
Advancing issues outnumbered declining ones on the NYSE by a 1.45-to-1 ratio; on Nasdaq, a 1.38-to-1 ratio favored advancers.
The S&P 500 posted 1 new 52-week highs and 14 new lows; the Nasdaq Composite recorded 44 new highs and 331 new lows.
