Surprise Japan Move Rattles Bond Markets

Stocks closed modestly higher on Wall Street Tuesday, while bond markets around the world felt pain after a surprise move from Japan’s central bank cranked the pressure even higher on the already slowing global economy. The S&P 500 rose 3.96 points, or 0.1%, to 3,821.62. The Dow Jones Industrial Average rose 92.20 points, or 0.3%, to 32,849.74. The Nasdaq rose 1.08 points, or less than 0.1%, to 10,547.11. Bond yields pushed higher after one of the world’s last bastions of super-low and economy-aiding interest rates made moves that could allow rates to climb more than otherwise. The Bank of Japan said it still wants the yield on 10-year Japanese government bonds to remain at roughly zero, but it will allow the yield to move up to 0.50% instead of the 0.25% cap it had held previously, the AP reports.

On Wall Street, stocks of energy-related companies climbed as the price of US oil settled 1.2% higher. Halliburton gained 3.8%, and Schlumberger rose 3.9%. Banks and technology stocks were among the gainers. JPMorgan Chase rose 0.4% and Adobe added 2.9%. Meta, Facebook's parent company, rose 2.3% after falling 4.1% Monday. Tesla slumped 8.1%. The stock is now down around 30% for December and is on course to have the worst month in its history, a record currently held by a 24.6% drop in Dec. 2010, MarketWatch reports. Analysts say several issues have contributed to the stock's decline, including CEO Elon Musk's "loss of focus" on the company after his acquisition of Twitter.

What made Tokyo’s unexpected move a particular jolt was how much resistance it's shown so far in joining the global campaign to hike rates in order to undercut high inflation. "It was a surprise, a very unexpected move, but on its own it’s probably not enough to really be a risk-off event for markets," said Ross Mayfield, investment strategist at Baird. Aftershocks from the Bank of Japan’s move on rippled through bond and currency markets around the world. In the US the yield on the 10-year Treasury rose to 3.68% from 3.59% late Monday. That yield helps set rates for mortgages and other economy-setting loans, which has already meant particular pain for the US housing market. A report on Tuesday showed US homebuilders broke ground on fewer homes for a third straight month in November. (More stock market stories.)