US stocks seenawed in back-and-forth trading Tuesday as pessimism permeated Wall Street following four straight days of losses for the major equity indexes.
A hawkish move by the Bank of Japan to adjust the cap on its 10-year government bond yield also rattled markets, as investors worry aggressive monetary tightening by central banks around the world may cause a global recession. Last week, the US Federal Reserve, European Central Bank, and others raised interest rates.
The S&P 500 (^GSPC) declined 0.2%, while the Dow Jones Industrial Average (^DJI) was roughly flat around 11:24 am ET. The technology-heavy Nasdaq Composite (^IXIC) was off by 0.4%. On Monday, all three major averages sank to their lowest closes in six weeks, with the S&P 500 weighed down by declines of more than 1% for Apple (AAPL), Microsoft (MSFT), and Alphabet (GOOG).
In bond markets, US Treasury yields extended an ascent, with the benchmark 10-year note rising above 3.67%.
Elsewhere, the US dollar index slipped against a spike in the Japanese yen that followed the Bank of Japan’s rate decision. Oil nudged higher, with West Texas Intermediate (WTI) crude futures up a modest 0.5%.
Expectations for an extensive period of restrictive monetary policy and the likelihood of a recession as a result have dashed investor hopes for a year-end rally. December is a historically bullish month for the stock market, but it appears to be anything but this season, with stocks on a steady downtrend after an upbeat October and November.
“With inflation expected to remain higher than the past decade and money supply still near a record high, there is still too much liquidity that needs to be drained,” Verdence Capital Management Chief Investment Officer Megan Horneman said in a note. “This means that the days of the Fed coming in and cutting rates to zero at any sign of economic weakness are behind us.
“Instead, expect more volatility in economic growth and potentially more frequent mild recessions over the next decade,” she added.
Investors digested a new batch of housing data Tuesday showing that housing starts and permits for future home construction declined as higher mortgage rates continued to slow activity in the market.
On the earnings side, results from Nike (NKE) and FedEx (FDX) are due out after the close.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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