U.S. stocks continued their upward trajectory on Tuesday, with the S&P 500 and Nasdaq Composite extending their winning streak to its longest in two years, fueled by a decline in U.S. Treasury yields.
The Dow Jones Industrial Average increased by 56.94 points, or 0.17 percent, settling at 34,152.80. The S&P 500 advanced by 12.40 points, or 0.28 percent, closing at 4,378.38, while the Nasdaq climbed by 121.08 points, or 0.90 percent, to 13,639.86.
Stocks started rallying last week, fueled by the Federal Reserve's decision to maintain its current interest rate range between 5.25 and 5.5 percent.
In the bond market, the 10-year Treasury yield held steady at around 4.58 percent, a little changed from the previous day, after finding a support level following its dip to 4.484 percent on Friday. It was the yield's lowest since September 26. Last month, the 10-year yield reached a 16-year high of 5.021 percent.
The two-year yield, which reflects interest rate expectations, went down by 2.8 basis points to 4.913 percent.
The benchmark 10-year yield has declined in five out of the last six sessions, while the 30-year yield has fallen in four of the last five sessions. It further retreated in anticipation of significant bond auctions this week.
The decline in Treasury yields boosted megacap growth stocks, with Microsoft rising by 1.1 percent, Apple gaining 1.5 percent and Amazon surging by 2.1 percent. These gains significantly contributed to the overall performance of the S&P 500 and Nasdaq indices.
In contrast to the positive sentiment in the U.S. stock market, global stocks retreated after Wall Street closed. MSCI's broadest index of Asia-Pacific shares declined by 0.44 percent, while the Pan-European Stoxx 50 futures sank 0.2 percent.
After an initial rise, Japan's Nikkei 225 closed 0.19 percent lower on Wednesday following remarks by Bank of Japan (BoJ) Governor Kazuo Ueda that the central bank did not need to wait for real wages to turn positive before phasing out its stimulus measures. He also alluded to possibly ending the BoJ's ETF purchase program soon.
Chinese equities also retreated despite a brief reprieve following encouraging comments from the People's Bank of China governor. Hong Kong's Hang Seng Index declined 0.6 percent, while the CSI 300 Index of mainland blue chips shed 0.46 percent.
Looking for insights from Fed
Investors are now anticipating key speeches from Fed Chair Jerome Powell, who is due to speak on Wednesday and Thursday, to offer insights into the central bank's stance on interest rates.
Last week, Powell indicated that the central bank would not require additional rate hikes to curb inflation. Still, he did not rule out the possibility of further rate increases if economic conditions warrant.
Some Fed officials have spoken up this week, emphasizing the necessity of further rate hikes to combat persistent inflation. These include Fed Governor Michelle Bowman, Minneapolis Fed President Neel Kashkari and Chicago Fed President Austan Goolsbee.
"We're in for a much longer cycle of higher rates than the most bullish people are expecting," said Rick Meckler, partner at Cherry Lane Investments in New Jersey.
"Inflation is something that we've learned is hard to tamp down once it really gets going."
CME Group's FedWatch Tool indicates that market expectations for the Fed to maintain its current interest rate range at its December policy meeting have increased significantly to 90.2 percent from 68.9 percent a week ago.
Traders will also closely follow the two-day bilateral meetings between U.S. Treasury Secretary Janet Yellen and her Chinese counterpart He Lifeng in San Francisco this week.