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Wall Street closed higher on Tuesday terminating a four-day losing streak. Market participants have ignored a sudden change in Bank of Japan’s policy that briefly rattled the global financial markets. Moreover, investors have digested mixed housing market data. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% to close at 32,849.74. Notably, 11 components of the 30-stock index ended in negative territory while 19 in positive zone. The tech-heavy Nasdaq Composite finished at 10,547.11, increasing 1.08 points due to good performance of large-cap technology stocks.
The S&P 500 gained 0.1% to end at 3,821.62. Seven out of 11 broad sectors of the benchmark index closed in positive territory while four in negative zone. The Consumer Discretionary Select Sector SPDR (XLY) fell 1.2% while the Energy Select Sector SPDR (XLE) rose 1.5%.
The fear-gauge CBOE Volatility Index (VIX) was down 4.2% to 21.48. A total of 10.52 billion shares were traded on Tuesday, lower than the last 20-session average of 11.15 billion. Advancers outnumbered decliners on the NYSE by a 1.12-to-1 ratio. On Nasdaq, a 1.06-to-1 ratio favored advancing issues.
BOJ Rattles Global Financial Markets
Global financial markets were completely surprised as the Bank of Japan suddenly widened its target range for 10-year Japanese government bond yields. The Bank of Japan raised the yield curve control range to 0.5% from the current level of 0.25% around its target level of 0% yield.
This has sparked widespread selling of bonds and stocks across global financial market as the Japanese central bank’s move was perceived by market participants as potentially hawkish. BOJ has so far maintained a 0% benchmark interest rate.
Globally Hawkish Central Banks
On Dec 14, the Fed increased interest rates by another 50 basis points. The Fed indicated that the central bank would continue increasing interest rates at regular intervals through 2023. The latest hike of interest rate took the benchmark range of 4.25% to 4.50%, and the Fed projected it to top out at 5.25% before it takes a call on pausing the hikes. This is higher than the September forecast of 4.75%.
Recession fears were further ignited after central banks in Europe also hinted at hiking interest rates through 2023. Both the Bank of England and the European Central Bank slowed down their pace of rate hikes but increased interest rates by 50 basis points. Investors were once again alarmed by this as they believe that ongoing rate increases could push the economy into a recession.
Economic Data
The Department of Commerce reported that housing starts in November came in at 1.427 million units, beating the consensus estimate of 1.409 million units. October’s data was revised upward to 1.434 million units from 1.425 million units reported earlier. Year over year, housing starts fell 16.4% in November.
Building permits in November came in at 1.342 million units, missing the consensus estimate of 1.49 million units. October’s data was revised downward to 1.512 million units from 1.526 million units reported earlier. Year over year, building permits fell 11.2% in November.
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Stock Market News for Dec 21, 2022
Wall Street closed higher on Tuesday terminating a four-day losing streak. Market participants have ignored a sudden change in Bank of Japan’s policy that briefly rattled the global financial markets. Moreover, investors have digested mixed housing market data. All the three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.3% to close at 32,849.74. Notably, 11 components of the 30-stock index ended in negative territory while 19 in positive zone. The tech-heavy Nasdaq Composite finished at 10,547.11, increasing 1.08 points due to good performance of large-cap technology stocks.
The major gainer of the tech-laden index was Moderna Inc. (MRNA - Free Report) , shares of which climbed 5.9%. Moderna currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The S&P 500 gained 0.1% to end at 3,821.62. Seven out of 11 broad sectors of the benchmark index closed in positive territory while four in negative zone. The Consumer Discretionary Select Sector SPDR (XLY) fell 1.2% while the Energy Select Sector SPDR (XLE) rose 1.5%.
The fear-gauge CBOE Volatility Index (VIX) was down 4.2% to 21.48. A total of 10.52 billion shares were traded on Tuesday, lower than the last 20-session average of 11.15 billion. Advancers outnumbered decliners on the NYSE by a 1.12-to-1 ratio. On Nasdaq, a 1.06-to-1 ratio favored advancing issues.
BOJ Rattles Global Financial Markets
Global financial markets were completely surprised as the Bank of Japan suddenly widened its target range for 10-year Japanese government bond yields. The Bank of Japan raised the yield curve control range to 0.5% from the current level of 0.25% around its target level of 0% yield.
This has sparked widespread selling of bonds and stocks across global financial market as the Japanese central bank’s move was perceived by market participants as potentially hawkish. BOJ has so far maintained a 0% benchmark interest rate.
Globally Hawkish Central Banks
On Dec 14, the Fed increased interest rates by another 50 basis points. The Fed indicated that the central bank would continue increasing interest rates at regular intervals through 2023. The latest hike of interest rate took the benchmark range of 4.25% to 4.50%, and the Fed projected it to top out at 5.25% before it takes a call on pausing the hikes. This is higher than the September forecast of 4.75%.
Recession fears were further ignited after central banks in Europe also hinted at hiking interest rates through 2023. Both the Bank of England and the European Central Bank slowed down their pace of rate hikes but increased interest rates by 50 basis points. Investors were once again alarmed by this as they believe that ongoing rate increases could push the economy into a recession.
Economic Data
The Department of Commerce reported that housing starts in November came in at 1.427 million units, beating the consensus estimate of 1.409 million units. October’s data was revised upward to 1.434 million units from 1.425 million units reported earlier. Year over year, housing starts fell 16.4% in November.
Building permits in November came in at 1.342 million units, missing the consensus estimate of 1.49 million units. October’s data was revised downward to 1.512 million units from 1.526 million units reported earlier. Year over year, building permits fell 11.2% in November.