Wall Street stocks regained ground on Tuesday after four sessions of price declines. However, investors are still worried about weak holiday shopping and rising bond yields which added to the tension following the Bank of Japan's (BoJ) unexpected monetary policy change.
Since last week's policy meeting, investors have been anxious about the Federal Reserve's plan to keep raising interest rates in the United States. The fear grew after the BoJ shifted its policies to reduce some of the costs of prolonged monetary stimulus, allowing long-term interest rates to rise even further.
According to Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, the BoJ's decision stirred the U.S. bond market. U.S. Treasury prices fell, with the benchmark 10-year Treasury yield rising to a three-week high of 3.69 percent following the surprise move.
Furthermore, investors are highly cautious following a turbulent year in equities, with the S&P 500 on track for its most significant annual decline since the 2008 financial crisis.
Carol Schleif, deputy chief investment officer at BMO Family Office, said, "People have gotten their heads handed to them all year and they're not confident enough to want to step in."
"People have gotten their heads handed to them all year and they're not confident enough to want to step in,"
Carol Schleif, deputy chief investment officer at BMO Family Office
She added that this uncertainty has caused a “push-pull market.” “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,” Schleif said.
According to her, investors were worried about the upcoming quarter's earnings reports and winter holiday shopping. "We came in with some pretty reasonable expectations, but retailers are having to do massive sales,” she added.
She also noted that this year's consumers focus more on services and events, such as vacation ticket prices and restaurant gift cards, than on another sweater or bag.
Latest performances of U.S. stocks
The S&P 500 garnered 3.96 points, or 0.10 percent, to 3,821.62, and the Nasdaq Composite (adjusted 1.08 points, or 0.01 percent, to 10,547.11. The Dow Jones Industrial Average soared 92.2 points or 0.28 percent to 32,849.74.
On the New York Stock Exchange, advancing issues outnumbered decliners by a 1.12-to-1 ratio. However, on Nasdaq, a 1.06-to-1 ratio favored advancers.
In addition, the S&P 500 set a new 52-week high and 14 new lows, while the Nasdaq Composite established 64 new highs and 399 new lows.
The energy index managed to gain the most of the S&P 500's 11 major sectors, raising 1.52 percent as prices for crude oil went up. Consumer discretionary was the lowest of the four declining sectors, falling 1.13 percent.
Following JPMorgan's bearish research on transportation companies, the Dow Jones Transport average closed down 1.3 percent, performing poorly on the broader market throughout the session.
FedEx Corporation fell 2.6 percent before its quarterly update. However, shares in the delivery company, which shocked the market in September after lowering its financial forecast, were up more than three percent in volatile after-hours trading following the release of its 2023 guidance and fiscal second-quarter report.
Data revealed Tuesday that single-family homebuilding in the U.S. had fallen to a two-and-a-half-year low in November. Approvals for future construction fell as higher mortgage rates progressed to dampen housing market activity.
General Mills shares dropped 4.6 percent after quarterly sales at its high-margin pet business tumbled due to key retailers reducing inventory, outshining an upsurge in its sales forecast and full-year earnings.
Tesla stocks dropped eight percent after at least three brokerages lowered the company’s target price due to increasing fears about demand weakness and the risk posed by Twitter's recent struggle involving CEO Elon Musk.
No one wants the job who can actually keep Twitter alive. There is no successor.
— Elon Musk (@elonmusk) December 19, 2022
Wells Fargo & Co. slumped two percent after U.S. regulators fined the lender $3.7 billion for its pervasive mishandling of mortgages, auto loans and deposit accounts.
Over 10 billion shares were traded on U.S. exchanges, compared to the 11.15 billion average over the previous 20 trading days.