Wall Street stocks fall, bond yields rise as China drops its quarantine rule

NEW YORK (Reuters) – The S&P 500 and the Nasdaq closed lower on Tuesday after U.S. economic data kicked off a holiday-shortened week, while bond yields rose after China said it would scrap its COVID-19 quarantine rule. for arriving passengers.

US Treasury yields rose as investors tried to assess the path of the Federal Reserve’s rate hikes and looked forward to China’s deregulation. While the changes in China were seen as a potential economic boost, money managers were cautious about reports of increased infection rates there.

Meanwhile, US economic data showed that the advancing goods trade deficit for November narrowed to $83.35 billion from $98.8 billion in the previous month, while a separate report indicated continued struggles in the housing market as home prices fell under rising mortgage rates.

Oil futures, after hitting a three-week high earlier in the day, were a mixed bag settling as some US power plants shut down by winter storms restarted hopes of demand rebounding after China’s latest easing restrictions.

The rise in Treasury yields has put pressure on growth stocks including the price-sensitive technology sector, according to Michael O’Rourke, chief market strategist at Jones Trading in Stamford, Connecticut.

“It’s just that nobody has the conviction to step in and buy now,” O’Rourke said.

The strategist also noted the weight of the sharp decline of electric car maker Tesla Inc (TSLA.O)Which fell 11.4 percent on Tuesday, to its lowest close since August 2020. Reuters reported that Tesla plans a reduced production schedule in Shanghai in January to extend production cuts it started this month.

Gene Goldman, chief investment officer at Cetera Investment Management, called Tuesday’s session “lackluster” as investors waited for next week’s Federal Reserve meeting minutes and economic data such as the jobs report.

Dow Jones Industrial Average (.DJI) The S&P 500 rose 37.83 points, or 0.11%, to 33,241.76. (.SPX) It lost 15.56 points, or 0.40%, to 3,829.26 points, and the Nasdaq Composite. (nineteenth) It fell 144.64 points, or 1.38%, to 10,353.23 points.

Markets in some areas including London, Dublin, Hong Kong and Australia remained closed after the Christmas holidays.

MSCI’s measure of stocks around the world (.MIWD00000PUS) It declined 0.15% and is down 19.8% year-to-date.

While Cetera’s Goldman said changing China’s COVID policies would be “good news for the global economy down the road,” he did note renewed caution among people in China due to the current rise in COVID infections since China eased restrictions.

The benchmark 10-year note rose 10.7 basis points to 3.854%, from 3.747% late Friday. The 30-year note rose 12 basis points to 3.9417% from 3.822%. The two-year note was up 6.6 basis points to 4.3891% from 4.323%.

The dollar was almost flat on Tuesday as investors digested China news.

The dollar index, which measures the greenback against a basket of major currencies, rose 0.086%, with the euro gaining 0.04% to $1.0639.

The Japanese yen fell 0.49% against the dollar at 133.54 per dollar, while the pound sterling was last traded at $1.2026, down 0.28% on the day.

“We’ve been in a very tight trading range, and I think as the dollar strengthens against the euro and the yen, we could see further gains in the dollar against the Chinese currency,” said Mark Chandler, chief market strategist at Bannockburn Global Forex.

In energy futures, US crude closed down 0.04% at $79.53 a barrel and Brent crude closed at $84.33, up 0.49% on the day.

Gold prices jumped to a six-month high on Tuesday as traders were optimistic about major consumer China’s decision to further ease COVID-19 restrictions.

Spot gold rose 0.8% to $1,812.58 an ounce. US gold futures rose 1.12% to $1,816.00 an ounce.

Additional reporting by Sinad Caro in New York and Neil Mackenzie in London Additional reporting by Zhi Yu and Ankur Banerjee Editing by Simon Cameron-Moore and Matthew Lewis

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