by US stocks teetered back and forth on Tuesday as pessimism permeated Wall Street after major stock indexes suffered four straight days of losses.
A hawkish move by the Bank of Japan to adjust the cap on its 10-year government bond yield also rocked markets as investors fear aggressive monetary tightening by central banks around the world could trigger a global recession. Last week, the US Federal Reserve, the European Central Bank and others hiked interest rates.
The S&P 500 (^GSPC) is down 0.2%, while the Dow Jones Industrial Average (^DJI) is roughly flat as of 11:24 am ET. The tech-heavy Nasdaq Composite (^IXIC) lost 0.4%. On Monday, all three major moving averages fell to their lowest closes in six weeks, with the S&P 500 weighed down by falls of more than 1% in Apple (AAPL), Microsoft (MSFT) and Alphabet (GOOG).
In bond markets, US Treasury yields continued to rise, with the benchmark 10-year bond rising over 3.67%.
Elsewhere, the US dollar index slipped against a rise in the Japanese yen following the Bank of Japan interest rate decision. Oil rose, with West Texas Intermediate (WTI) crude futures up a modest 0.5%.
Expectations of an extended period of tightening monetary policy and the likelihood of an ensuing recession have dashed investors’ hopes of a year-end rally. December has historically been a bullish month for the stock market, but it seems anything but this season as stocks are in a steady downtrend after a positive October and November.
“With inflation expected to remain higher than it has been over the last decade and the money supply still near record highs, there is still too much liquidity to be vented,” Megan Horneman, Verdence Capital Management’s chief investment officer, said in a note. “This means the days when the Fed came and cut rates to zero at every sign of economic weakness are behind us.
“Instead, expect more volatility in economic growth and possibly more frequent mild recessions over the next decade,” she added.
Investors on Tuesday digested a new set of housing data showing housing starts and future home permits falling as higher mortgage rates continued to slow activity in the market.
On the earnings side, the results of Nike (NKE) and FedEx (FDX) are due after the close.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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