U.S. stocks turned higher in volatile trading Tuesday as investors attempted to thwart losses from stretching into a fifth day.
A hawkish move by the Bank of Japan to adjust the cap on its 10-year government bond yield rattled markets in early trading, with investors worried aggressive monetary tightening by central banks around the world may cause a global recession. Last week, the U.S. Federal Reserve, European Central Bank, and others raised interest rates.
The S&P 500 (^GSPC) inched up 0.2%, while the Dow Jones Industrial Average (^DJI) added 140 points, or 0.3% around 1:05 p.m. ET. The Nasdaq Composite (^IXIC) was up roughly 0.2%. 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, U.S. Treasury yields extended an ascent, with the benchmark 10-year note topping 3.69%. Elsewhere, the U.S. dollar index slipped against a spike in the Japanese yen that followed the Bank of Japan’s rate decision. Oil steadied, with West Texas Intermediate (WTI) crude futures trading around $75 per barrel.
Shares of Tesla (TSLA) tanked more than 5% as investor concerns escalated around CEO Elon Musk’s leadership following reports he is looking for his replacement as head of Twitter.
The plunge extends a period of heavy losses for the electric vehicle giant. Last week, shares of Tesla plunged 16% — marking its worst week since the onset of the COVID-19 pandemic in March 2020, with investors worried Musk’s management of Twitter is diverting his attention away from Tesla.
Wall Street analysts have increasingly become more cautious on the company heading into 2023, adding to a brutal month and year for Tesla.
EvercoreISI analyst Chris McNally slashed his price target on Tesla’s stock to $200 from $300 on Tuesday, joining bearish takes from Goldman Sachs, Wedbush, and Oppenheimer.
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.
A person exits the New York Stock Exchange (NYSE) ahead of the Federal Reserve announcement in New York City, U.S., December 14, 2022. REUTERS/Andrew Kelly
“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 …….
