Some calm is returning to Wall Street, and U.S. stocks are holding steadier after Japan’s market soared earlier Tuesday to bounce back from its worst loss since 1987.
The S&P 500 was 0.2% higher in early trading and on track to break a brutal three-day losing streak. It had tumbled a bit more than 6% after several weaker-than-expected reports raised worries that the Federal Reserve had pressed the brakes too hard for too long on the U.S. economy through high interest rates in order to beat inflation.
The Dow Jones Industrial Average was up 47 points, or 0.1%, as of 8:43 a.m. Central time, and the Nasdaq composite was 0.3% lower.
Stronger-than-expected profit reports from several big U.S. companies helped support the market. Kenvue, the company behind Tylenol and Band-Aids, jumped 13.5% after reporting stronger profit than expected thanks in part to higher prices for its products. Uber rolled 4.3% higher after easily topping profit forecasts for the latest quarter.
Several technical factors may have accelerated the recent swoon for markets, beyond the weak U.S. hiring data and other reports, in what strategists at Barclays call “a perfect storm” for causing extreme market moves. One is centered in Tokyo, where a favorite trade for hedge funds and other investors began unraveling last week after the Bank of Japan made borrowing more expensive by raising interest rates above virtually zero.
That scrambled trades where investors had borrowed Japanese yen at low cost and invested it elsewhere around the world. The resulting exits from those trades may have helped accelerate the declines for markets around the world.
