U.S. Stocks Snap 4-day Losing Streak, European Markets Wavered

Barry Adams
20 Dec, 2022
New York City

Stocks on Wall Street opened lower and bond yields inched higher after a selloff in the global bond markets. 

The worldwide bond yields rose after the Bank of Japan lifted the upper limit of the target range, surprising financial markets.  

The  Bank of Japan also left its key lending rate at -0.1% but the widening of the yield range confirmed the central bank's readiness in ending six years of loose monetary policy. 

The Bank of Japan is the last major central bank to adjust rate policy, following rate hikes by more than 10 central banks. 

Despite the multiple rate hikes, real rates are still negative in G7 countries and not restrictive in limiting economic activities. 

Moreover, investors are anticipating downward earnings revision as central banks are looking to dampen economic activities and tame 4-decade high inflation in the Euro Area and in the United States. 

In addition, China is battling the fallout from the strict zero-Covid restrictions and deep financial turmoil in the property sector.   

Stocks rebounded in afternoon trading and the S&P 500 and the Nasdaq snapped a 4-day losing streak. 

 

Market Indexes Struggled to Gain Traction

The S&P 500 index declined 0.1% to 3,821.73 and the Nasdaq Composite index rose 0.01% to 10,547.11. 

Crude oil inched up 49 cents to $75.83 a barrel and natural gas futures prices declined 54 cents to $5.32 a thermal unit.   

The yield on 2-year Treasury notes increased to 4.27%, 10-year Treasury notes rose to 3.69% and 30-year Treasury bonds edged up to 3.74%. 

 

U.S. Movers

Tesla Inc declined 6.6% to $140.10 on the China sales worries and CEO Elon Musk leadership at the company after his recent purchase of Twitter Inc. 

General Mills, Inc declined 4.2% to %83.44 despite the company reporting higher sales and earnings in the last quarter but investors worried that nearly flat earnings were supported by a large price increase in North America. 

Lucid Group Inc increased 0.7% to $7.29 after electric vehicle maker said it has raised $1.515 billion, including $915 million through a private placement and $600 million through the sale of stock "at-the-market" equity offering.  

Quantumscape Corp increased 0.4% to $5.87 after the company said it has shipped its first 24-layer prototype lithium-metal battery cells to automotive OEMs for testing. 

 

Housing Permits Plunge, Completions Rise

U.S. housing starts declined 0.5% to a seasonally adjusted 1.427 million annual rate after dropping downwardly revised 2.1% in October, the U.S. Census Bureau reported Tuesday. 

Single family housing starts declined 4.1% to an annual pace of 828.000 and multi-family starts jumped 4.8% to 584,000. 

Housing market is struggling under rising mortgage rates and record home prices, keeping many first time buyers away from the market. 

November building permits declined 11.2% to a seasonally adjusted annual rate of 1.342 million from October and 22.4% below 1.792 million a year ago.

The monthly decline in permits was the largest since the pandemic era as home builders struggle with rising mortgage rates. 

Housing completions increased 10.8% to a seasonally adjusted annual rate of 1.49 million from the revised October estimate of 1.345 million and 6.0% higher than 1.406 million rate a year ago.

 

European Markets Wavered, Natural Gas Volatile After Pipe Explosion

European markets pared losses and investors continue to assess the hawkish stance from the central banks and worry that rising rates and elevated inflation are likely to drag the economy into a recession. 

The DAX index dropped 0.4% to 13,884.66, the CAC-40 index declined 0.4% to 6,450.43 and the FTSE 100 index inched up 9.31 points to 7,370.63. 

Natural gas prices were volatile and traded as low as