U.S. stocks turned higher in late Tuesday trading, even as major indices remain on pace for the worst monthly performance of the year as high interest rates, mounting geopolitical risks and softer-than-expected earnings from mega-cap tech stocks hold down gains.
Investors found some relief from the recent surge in Treasury bond yields late Monday, however, with the moves spilling over into the Tuesday session, following a smaller-than-expected $776 billion borrowing target issued by the Treasury.
That tally, around $76 billion lighter than forecasts, came just hours ahead of a Bank of Japan rate decision that included faster inflation forecasts and a wider trading band for Japanese government bonds. Both are unlikely to alter the demand for U.S. Treasuries from Japan-based investment funds.
Benchmark 10-year Treasury note yields were marked 2 basis points lower from Monday levels in the New York session at 4.882%, and down nearly 20 basis points (around fifth of a percentage point) from the 2007 highs reached last week. Two-year notes were pegged 5 basis points higher at 5.0767%.
The U.S. dollar index was marked 0.6% higher against a basket of its global peers in early New York trading, at 106.757 as the yen fell the most in two months to 151.54 against the greenback and slumped to the lowest levels since 2008 against the European single currency.
With a steadier rate backdrop, stocks on Tuesday are likely to focus on another parade of S&P 500 earnings. These include before-the-bell updates from Pfizer PFE and Caterpillar CAT and a report from chipmaker Advanced Micro Devices AMD after the bell.
With around half the S&P 500 reporting so far, overall earnings are forecast to rise 4.3% from a year earlier to a share-weighted $478.2 billion, according to LSEG data, before rising another 8.5% over the fourth quarter.
The Federal Reserve also begins its two-day policy meeting today, with its interest rate decision slated for 2 p.m. Eastern Time on Wednesday. Markets are still betting that rates will remain steady at between 5.25% and 5.5%, and see no better than a 30% chance of a rate hike over the next seven months.
Global oil prices were moving higher in early New York trading as Israel began targeting areas in and around Lebanon as it attempted to neutralize Iran-backed Hezbollah militants while expanding its incursion into Gaza.
Brent crude contracts for December delivery, the global pricing benchmark, added 20 cents to trade at $87.65 per barrel while WTI contacts for the same month gained 14 cents to $82.45 per barrel.
Heading into the final hour of the trading day on Wall Street, the S&P 500 was marked 25 points, or 0.6% higher, while the Dow Jones Industrial Average gained 111 points even with a near 100 point drag from Caterpillar earnings. The Nasdaq was up 60 points.
In overseas markets, European stocks are on pace for their worst monthly performance in more than a year, although the Stoxx 600 was marked 0.48% higher by the close of Frankfurt trading amid another busy earnings session.
Overnight in Asia, Japan's Nikkei 225 ended the session 0.53% higher following the Bank of Japan rate decision. And a softer-than-expected reading for factory activity in China, which slipped into contraction for the month of October, kept the regionwide MSCI ex-Japan benchmark 0.71% lower heading into the final hours of trading.
- Action Alerts PLUS offers expert portfolio guidance to help you make informed investing decisions. Sign up now.
