Stocks experienced a rise on Tuesday despite a surprising move from the Bank of Japan that caused global bond yields to increase. Investors chose to overlook concerns that a year-end rally may not occur.
The Dow Jones Industrial Average increased by 92.20 points, or 0.28%, closing at 32,849.74. The S&P 500 saw a gain of 0.10% and ended at 3,821.62. Similarly, the Nasdaq Composite ticked up 0.01% and concluded the session at 10,547.11.
During the previous night, the Bank of Japan unexpectedly expanded its cap on the 10-year Japanese government bond yield, catching traders off guard and causing stock futures to initially decline. This added to the pressure from other hawkish central banks, such as the European Central Bank and the Federal Reserve, which had raised rates the previous week.
However, stocks managed to recover later in the day as traders evaluated the central bank actions and speculated that most banks would halt their rate hikes next year.
"Over 90% of central banks have increased interest rates this year, resulting in an unprecedented (mostly) global coordinated effort," stated Lawrence Gillum, a fixed income strategist at LPL Financial. "The positive news is that we believe we are close to the end of these rate hiking cycles, which could reduce the headwinds experienced by global financial markets this year."
Despite the gains seen on Tuesday, stocks are still expected to end the week and month in negative territory. The Dow has declined by 5.03% month to date. In December, the S&P 500 has dropped by 6.34%, and the Nasdaq has experienced an 8.03% loss.
A few major companies, including Nike and FedEx, are scheduled to release their quarterly results this week before the Christmas holiday.
This week will also provide valuable insights into the housing industry, with sales data for existing homes and new homes set to be released on Wednesday and Friday, respectively.
The personal consumption expenditures report for November, which is a preferred measure of inflation for the Federal Reserve, is due to be released on Friday.
Read today's market coverage in Spanish here.