Stocks drift, bond yields jump after Japan surprises markets – WSB-TV Channel 2

NEW YORK – (AP) – Stocks tumbled on Wall Street, and bond markets around the world felt the pain Tuesday, after a surprise move by Japan’s central bank added pressure to an already sluggish global economy.

The S&P 500 was 0.1% higher after swinging between small losses and gains in early morning trade. The Dow Jones Industrial Average was up 68 points, or 0.2%, at 32,825 as of 10 a.m. ET, while the Nasdaq composite was almost flat. almost, almost, almost, almost, almost.

The biggest move was in the bond market, where yields rose after one of the world’s last stables of super-low interest rates and economic aid moved that could have allowed rates to rise further.

The Bank of Japan said on Tuesday that it still wants the yield on 10-year Japanese government bonds to remain close to zero, but it also said it would allow the yield to drop to 0% instead of the 0.25% it previously held. 50. What made Tokyo’s unexpected move a particular surprise was that the world’s third-largest economy was among the most resilient to a global campaign to raise rates sharply to curb high inflation.

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“The BoJ’s surprise move allowed it to take a small step away from the bullish side of monetary policy speculation, where it stood alone among major central banks all year,” Jennifer Lee of BMO Economics wrote in a note to clients. “It doesn’t join the rates there, but it’s a little closer now.”

Higher yields make borrowing more expensive, which slows the economy and also lowers the price of stocks and other investments. Other central banks around the world, especially in the US and Europe, are raising interest rates at such an explosive clip that a large number of economists and investors see a recession in 2023.

Tremors after the Bank of Japan’s move sent shockwaves through bond and currency markets around the world.

In the United States, the 10-year Treasury yield rose to 3.69% from 3.59% late on Monday. That product helps set rates for mortgages and other debt in the economy, which already means particular pain for the U.S. housing market.

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U.S. homebuilders broke new ground for the third straight month in November, a report showed on Tuesday. Meanwhile, the number of building permits fell to the lowest level since June 2020, when the pandemic froze the economy.

The two-year US Treasury yield, which closely tracks expectations of action from the Federal Reserve, was more conservative. It went from 4.26% to 4.28%.

In the foreign exchange market, Tokyo’s surprise move sent the Japanese yen higher against the US dollar, reversing some of its big gains over the past year. One dollar is currently trading at 132.52 yen, down 3.2% from the previous day.

The Nikkei 225 index of Japanese stock markets also fell by 2.5%.

Stocks around the world have been under pressure due to concerns about high inflation, high interest rates and a weakening economy throughout the year.

In Shanghai, stocks lost 1.1% after the World Bank cut its forecast for China’s economic growth this year to 2.7% from its June outlook of 4.3%. The Bank has announced the repeated closure of major cities to combat the spread of COVID-19. China is now relaxing some of its anti-COVID restrictions, but concerns are growing that the fallout from the virus outbreak could mean another blow to the world’s second-largest economy.

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European markets were marginally lower. Stocks hit hardest by higher interest rates were among the hardest hit. Apple fell 1.8% and was the single biggest weight on the S&P 500, while Tesla lost 3.1% and Nvidia fell 2.1%.

Emerging technology companies are seen as some of the most vulnerable to higher interest rates after they were some of the biggest beneficiaries of the previous ultra-low rate era. —

AP Business writers Joe McDonald and Matt Ott contributed.



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