NEW YORK Dec 27 (Reuters) – The S&P 500 and the Nasdaq fell on Tuesday after the release of U.S. economic data at the start of a holiday-shortened week, while oil prices rose on demand hopes after China said it would scrap its COVID-19 quarantine rule for inbound travellers.
U.S. Treasury yields rose after data showed the advance goods trade deficit for November narrowed to $83.35 billion from the prior month’s $98.8 billion, while a separate report pointed to continued struggles for the housing market as home prices fell under rising mortgage rates.
While oil pared gains as some U.S. energy facilities shut by winter storms began to restart, the commodity had earlier hit a three-week high as China’s latest easing of COVID restrictions spurred hopes of a recovery in demand.
The rise in Treasury yields put pressure on growth stocks including the rate-sensitive technology sector, according to Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
“It’s a lack of anybody with the conviction to step in and buy right now,” said O’Rourke, who said further pressure came from a sharp decline in shares of electric car maker Tesla Inc (TSLA.O), which was down around 8% at 1925 GMT.
Gene Goldman, chief investment officer at Cetera Investment Management, described Tuesday’s session as “lacklustre” as investors were waiting for next week’s Fed meeting minutes and economic data such as the jobs report.
The Dow Jones Industrial Average (.DJI) rose 51.78 points, or 0.16%, to 33,255.71, the S&P 500 (.SPX) lost 16.49 points, or 0.43%, to 3,828.33 and the Nasdaq Composite (.IXIC) dropped 132.49 points, or 1.26%, to 10,365.37.
The pan-European STOXX 600 index (.STOXX) rose 0.13% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 0.13%.
Markets in some regions including London, Dublin, Hong Kong and Australia remained shut after the Christmas holiday.
Emerging market stocks (.MSCIEF) rose 0.26%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.53% higher, while Japan’s Nikkei (.N225) rose 0.16%.
While Cetera’s Goldman said China’s changing COVID policies would be “good news for the global economy down the road,” he noted renewed caution among people in China due to the current uptick in COVID infections since China eased restrictions.
Benchmark 10-year notes were up 10.2 basis points at 3.849%, from 3.747% late on Friday. The 30-year bond was up 11.7 bps to yield 3.939%. The 2-year note was up 7.7 bps to yield 4.3998%.
The dollar pared losses on Tuesday on the China COVID news, which also boosted risk-related currencies such as the Australian dollar.
The dollar index , which measures the greenback against a basket of major currencies, was flat, with the euro up 0.12% at $1.0648.
The yen weakened 0.35% to 133.34 per dollar, while Sterling was last trading at $1.2032, down 0.23% on the day.
In energy futures, U.S. crude recently rose 0.68% to $80.10 per barrel and Brent was at $84.82, up 1.07% on the day.
Gold prices rose, while resilient U.S. yields cast a shadow over non-yielding bullion’s advance.
Spot gold added 1.0% to $1,816.20 an ounce. U.S. gold futures gained 1.17% to $1,816.90 an ounce.
Reporting by Sinéad Carew in New York, Nell Mackenzie in London
Additional reporting by Xie Yu and Ankur Banerjee
Editing by Simon Cameron-Moore and Matthew Lewis
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