Dow closes higher to end four-day losing streak

Pro Picks: Watch all of Tuesday's big stock calls on CNBC
Pro Picks: Watch all of Tuesday's big stock calls on CNBC

Stocks rose Tuesday as Wall Street shook off a surprise move from the Bank of Japan that sent global bond yields up. Investors also overlooked fears that a year-end rally may not come to pass.

The Dow Jones Industrial Average rose 92.20 points, or 0.28%, to close at 32,849.74. The S&P 500 gained 0.10% to 3,821.62, while the Nasdaq Composite ticked up 0.01% to end the session at 10,547.11.

Overnight, the Bank of Japan moved to widen its cap on the 10-year Japanese government bond yield, catching traders around the world off guard and sending stock futures down, initially. That added to pressure from other hawkish central banks, with both the European Central Bank and the Federal Reserve raising rates last week.

Stocks recovered later in the day as traders assessed central bank moves and bet that most will either stop hiking rates next year.

"Over 90% of central banks have hiked interest rates this year, making the (mostly) global coordinated effort unprecedented," said Lawrence Gillum, fixed income strategist at LPL Financial. "The good news? We think we're close to the end of these rate hiking cycles, which could lessen the headwind we've seen on global financial markets this year."

Even with Tuesday's gains, stocks are on track to end the week and month in the red. The Dow is down 5.03% month to date. In December, the S&P 500 has shed 6.34%, and the Nasdaq has lost 8.03%.

A handful of big companies will report their quarterly results this week ahead of the Christmas holiday. Nike and FedEx are set to report after the bell.

This week promises lots of insight into the housing industry. Sales data for existing homes and new homes will be released Wednesday and Friday, respectively.

November's personal consumption expenditures report, a preferred measure of inflation for the Fed, is due on Friday.

Lea la cobertura del mercado de hoy en español aquí.

Stocks hold onto gains, snap 4-day loss streak

Stocks eked out a gain Tuesday, snapping a four-day streak of losses.

The Dow Jones Industrial Average rose 92.47 points, or 0.28%, to close at 32,850.01. The S&P 500 gained 0.11% to 3,821.73, while the Nasdaq Composite ticked up 0.01% to close at 10,547.11.

—Carmen Reinicke

Expect a more challenging environment ahead, says Atlantic Equities

Atlantic Equities analysts are anticipating a more challenging backdrop for the global consumer in 2023.

"Inflation may well have peaked on a headline basis but input costs still remain elevated and companies will be looking to at least hold if not take further pricing in some cases," analyst Edward Lewis said in a note Tuesday. "That may become more challenging as levels of elasticity are beginning to normalize with U.S. retailers starting to push back against pricing, in line with where European peers have been all year."

He highlighted Coca-Cola and Pepsi as some of his favorite consumer picks, citing "category momentum, ongoing investment and strong execution supporting elevated growth."

— Tanaya Macheel

Stock rally fading in final hour of trading

Stocks slipped from session highs in the last hour of trading Wednesday as the major averages struggled to snap a 4-day losing streak.

The Dow Jones Industrial Average rose 65 points, or 0.20%, at around 3 pm ET. The S&P 500 gained 0.05%, while the Nasdaq Composite slipped 0.04%.

—Carmen Reinicke

Stock market has shed $11.7 trillion so far this year

It's been a rough year for stocks, which are currently in a bear market and down year to date.

From the market's yearly high on January 3 to this morning, U.S. stocks have shed $11.7 trillion in market cap, according to data from Bespoke Group.

"The max drawdown was $13.6 trillion at the low on 9/30, so we've seen market cap increase by just under $2 trillion since then," analysts wrote Tuesday. "In dollar terms, this drawdown has been more extreme than anything investors have ever experienced. That's pretty deflationary if you ask us!"

Of the $11.7 trillion, more than $5 trillion in losses come from just five companies - Apple, Microsoft, Amazon, Alphabet, Meta and Tesla.

—Carmen Reinicke

Pot stocks, ARK Innovation ETF are among 2022’s biggest underperformers

There was nowhere to hide from this year's market havoc, but certain sectors were especially hard hit in 2022. 

The Global X Cannabis ETF (POTX) slumped 67% and is well on its way for its third consecutive negative year. Canopy Growth and Tilray are dragging the fund, sliding 73% and tumbling more than 60% this year, respectively.

Speculative tech stocks are also taking a beating. Ark Innovation (ARKK) shed 65% in 2022, suffering as tech names slid amid rising interest rates. Coinbase, held by the ETF is off by 86% year to date, while Twilio is down 82%. Roku has plummeted 81% and is on track for its worst year ever, going back to its IPO in 2017.

Stocks aren't the only assets suffering. Lumber, down more than 67% in 2022, is on track for its worst year on record, dating back to 1979. Ether and bitcoin are also notable losers, with the former down nearly 67% year to date and the latter tanking by 63%. Both cryptocurrencies are on pace for the worst year since 2018.

-Darla Mercado, Gina Francolla

Pandemic may have gotten markets more comfortable with positive rates, Goldman says

The BOJ's moves Tuesday as well as rate hikes from the ECB and Fed signal a new era of positive global rates that markets are viewing more positively, according to Goldman Sachs.

"The pandemic may have finally jolted the world out of its post-GFC malaise -- a period of ultra-low rates but also anemic developed market growth and an eventual gradual move towards deglobalization," analysts wrote in a Tuesday note.

"On the surface, higher interest rates are not growth drivers. But positive interest rates seem to sit better with most investors than the negative interest rates that proliferated over the last decade," the note said.

"Being asked to pay borrowers for the 'privilege' of lending them money never seemed to make any sense," analysts wrote. "For borrowers, having to actually pay interest on the money that your borrowing is an incremental burden, but it seems like a pretty small (and normal) burden to bear to bring some reasonableness back to bond markets."

—Carmen Reinicke

Buy these industrial stocks on any market weakness, says Hightower's Link

Hightower's Stephanie Link plans to use any weakness in shares of Caterpillar and Deere to beef up her positions in the industrial stocks, she told CNBC's "Halftime Report" on Tuesday.

The investment case for Deere, which is Link's largest industrial position, hinges on its precision farm technology. Implementing these tools should offer better margin visibility through the end of the decade, she said.

At the same time, Link said the market is underestimating Caterpillar's energy business and its growth trajectory over the next few years. While it makes up just 35% of revenue today, she expects it to account for 40% to 45% by 2025.

"They've got strong pricing power and very tight inventory, so I like that," she said.

— Samantha Subin

Stocks making the biggest moves midday

These stocks are among those making the biggest moves midday:

  • Gilead Sciences — Gilead Sciences sank 2.49% after announcing its Kite unit would acquire biotech company Tmunity Therapeutics. The company warned the deal could reduce 2023 earnings per share by approximately 18-22 cents.
  • General Mills — General Mills dropped 3.96%, despite reporting better-than-expected revenue and profit for the last quarter. The food producer also raised its full-year forecast. Higher prices partially offset increased output costs.
  • Newmont — The gold miner climbed 4.32% as the price of gold climbed above $1,800. Still, the stock is down more than 22% year to date, on pace for its first annual decline since 2018.

To read more midday movers, click here.

— Michelle Fox

JPMorgan downgrades Whirlpool to neutral

JPMorgan on Tuesday lowered its rating on shares of Whirlpool to neutral from overweight, lowered its price target to $137 from $145 and cut the stock from its U.S. analyst focus list.

"While we continue to view the stock as inexpensive, currently trading at only roughly 5.2x our 2023E EBITDA, we believe that investor concerns regarding the sustainability of North American margins will continue to impact valuation, which may increase over the next 6-12 months amid a potentially more promotional and competitive backdrop," analysts wrote.

Now, JPMorgan thinks that Whirlpool will trade more in-line with its peers going forward.

—Carmen Reinicke

ARK Innovation ETF hits lowest level in 5 years amid tech rout

Cathie Wood's ARK Innovation ETF, ARKK, hit its lowest level in 5 years on Tuesday as technology names continue to slump after a rough year.

Shares of Tesla, one of the fund's holdings, contributed to the loss. The electric automaker shed nearly 5%, hitting a new 52-week low Tuesday. So far, the fund has shed more than 65% year to date.

Breaking below the 5-year level is bearish for market risk, according to Ari Wald, a technical analyst at Oppenheimer who tracks the fund.

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—Carmen Reinicke, Patti Domm

Apple testing a key support level

Evercore ISI technical analyst Rich Ross pointed out that Apple shares are testing a support level that has been in place for years. The stock hit an intraday low of $129.89 per share, dipping below $130 for the first time June.

However, Apple hasn't closed below $130 since June 2021.

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— Fred Imbert

Amazon among the S&P 500 stocks hitting fresh lows

At least 12 S&P 500 stocks hit fresh lows during Tuesday's trading session.

That included shares of Amazon, last trading near levels not seen since March 2020. Shares of Match Group last hovered near lows not seen since its initial public offering in November 2015.

These stocks also hit fresh lows:

  • Expedia trading at lows not seen since August 2020
  • Hasbro trading at lows not seen since March 2020
  • Tesla trading at lows not seen since November 2020
  • VF Corp. trading at lows not seen since September 2011
  • Generac trading at lows not seen since April 2020
  • NetApp trading at lows not seen since December 2020
  • Equity Residential trading at lows not seen since January 2021
  • Essex Property Trust trading at lows not seen since November 2020
  • Extra Space Storage trading at lows not seen since May 2021
  • Invitation Homes trading at lows not seen since March 2021

Arch Capital Group, meanwhile, traded near all-time high levels dating back to when it began trading on the Nasdaq in 2000.

— Samantha Subin

Here's when a Santa Claus rally could come, according to BTIG

There's still some time for a year-end Santa Claus rally, according to BTIG.

"For those wondering about a "Santa Claus Rally," recall that the official "SCR" period is the last 5 trading days of the year, and the first two of the new year," wrote Jonathan Krinsky in a Tuesday note. "That means this year it runs from December 23rd - January 4th."

He also noted that the S&P 500 filled its Nov. 10 gap of 3,818.

"We think some consolidation is likely in the near-term in the 3,800-3,900 zone, which should allow the recent oversold conditions to be worked off," he said.

If there isn't a Santa Claus rally into year-end, however, it could signal worse times ahead for stocks.

"As the saying goes, "If Santa Claus Should Fail to Call, Bears May Come to Broad and Wall," he said.

—Carmen Reinicke

Stocks lose steam at midday

Stocks slipped in midday trading Tuesday, giving up earlier gains, as Wall Street weighs more hawkish policy from central banks and a Santa Claus rally looks unlikely.

The Dow Jones Industrial Average rose 19 points, or 0.02%. The S&P 500 and Nasdaq Composite ticked down 0.16% and 0.39%, respectively.

—Carmen Reinicke

Bank of Japan is more hawkish sooner-than-expected, signals

The Bank of Japan's surprise policy shift sent interest rates rising globally, as investors reacted to more evidence central bankers around the world will continue to pressure interest rates higher.

"It was definitely a surprise. I don't think there was anyone out there who expected it," said Ben Jeffrey, rate strategist at BMO. The Japanese central bank moved sooner-than-expected to tighten policy. The BOJ changed its yield curve policy to allow the yield on the 10-year Japanese government bond to move 50 basis poins either side of its zero target rate, up from 25 basis points.

The announcement drove rates higher around the world, as yields on Japanese government bonds (JGBs) rose to 7-year highs. Rates move opposite yield. The U.S. 10-year jumped o 3.68%.

"They were definitely the last one standing in terms of being dovish, and now they're still dovish but less so," said Jeffrey. "It's obviously bearish JGBs and fixed income globally, but in the longer term it should help the yen which will make Treasurys more attractive to Japanese investors next year."

--Patti Domm

JPMorgan downgrades Yelp, cites worsening online advertising climate

JPMorgan downgraded Yelp to underweight from a neutral rating, saying in a note to clients Tuesday that shares will come under pressure as the online advertising environment weakens.

To be sure, the stock, and its advertising business, have held up better than some of its peers. Shares are down just 28%, compared to a more than 57% median decline among stocks within JPMorgan's small and mid-cap internet coverage.

That's due in part to Yelp's focus on lower-funnel ads — typically used before a user converts into a customer — and its attempts to diversify into self-serve and multi-location advertising, analyst Cory Carpenter wrote.

"However, Yelp started to observe increased caution from some of its national/mid-market advertisers in the restaurant and retail verticals late in 3Q, which we worry could spread more broadly to [small and medium-sized businesses] on moderating consumer spend in 2023," he wrote, while trimming the bank's price target to $23 from $34 a share.

Shares slumped more than 2% following the downgrade, with JPMorgan's implying a 14% downside from Monday's close.

Along with Yelp, JPMorgan downgraded Stitch Fix to underweight from a neutral rating, saying that cuts to advertising spending will weigh on the company's top and bottom lines. A difficult macro environment will likely also weigh on apparel spending in the new year, Carpenter said.

— Samantha Subin

Wells Fargo shares briefly pop

Shares of Wells Fargo popped as high as 1.77% after starting the trading session lower on Tuesday. The stock was last trading down 0.2%.

The bank agreed to a $3.7 billion settlement with the Consumer Financial Protection Bureau related to consumer abuses in its bank accounts, mortgages and auto loans, the CFPB said Tuesday.

In reaction to the news, Jefferies' analyst Ken Usdin noted that Wells Fargo has several other open legal items that could further hurt the bank.

Wells Fargo announced a fourth-quarter operating loss of $3.5 billion because of the costs of the CFPB civil penalty and customer remediation efforts, and other legal matters.

"WFC ann'd. 4Q22 op. losses of $3.5B, which suggests that prior income statement actions did not cover much of today's $3.7B. WFC has several other open legal items; its est. of potential losses in excess of current reserves was also $3.7B as of 3Q," Usdin wrote in a Tuesday note.

Still, the analyst called the settlement a positive development for the bank.

"While we do not see today's action as having a direct read-though to the asset cap and its potential removal, we would take today's announcement as a sign of positive progress on moving toward that ultimate goal," he added.

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— Sarah Min

Cantor Fitzgerald initiates coverage of Rivian with an overweight rating

It's time to snap up shares of Rivian before they take off, according to analyst Andres Sheppard at Cantor Fitzgerald.

The firm on Tuesday initiated coverage of the company with an overweight rating and a $30 price target, implying a more than 36% upside.

"We believe RIVN benefits from a differentiated product offering, a strong backing from Amazon (AMZN;NC), and a proprietary charging network," Sheppard wrote in a Tuesday note. "RIVN's shares are down ~79% YTD, so we believe this could be a good entry point for new investors."

—Carmen Reinicke

Credit Suisse downgrades Home Depot

Credit Suisse Analyst Karen Short assumed coverage of Home Depot with a neutral rating, saying the slowing housing market spells trouble for the home improvement retailer. The investment firm previously had an outperform rating on Home Depot.

"Our general view is that HD story offers a healthy balance of reasons to be positive longer term but cautious in the near term," Short wrote in a Monday note.

CNBC Pro subscribers can read the full story here.

— Sarah Min

Oppenheimer reiterates its outperform rating on Netflix

Oppenheimer remains bullish on Netflix, despite the streaming giant's reported struggles with its new advertising tier. Analyst Jason Helfstein reiterated his outperform rating and $365 price target, which implies nearly 27% upside from Tuesday's close.

"We believe NFLX stock will be driven by subs, not revenue, and data on viewership," he wrote in a note Monday.

Helfstein was responding to a report last week from Digiday that said Netflix is falling short of viewership guarantees and is allowing advertisers to get their money back for ads Netflix has yet to run. On Tuesday, data from analytics firm Antenna, first reported by The Wall Street Journal, showed the new plan made up just 9% of new subscriber sign ups during its first month on the market.

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However, the hiccups aren't surprising and Netflix doesn't want to flood ads to meet commitments of new engagements, Helfstein said. The streaming service also has strong fourth-quarter content engagement and viewership data show most consumers continue to value Netflix as a core streaming platform, he said.

Netflix has lost more than 50% year to date.

— Michelle Fox

Stocks slip at Tuesday's open

Stocks fell Tuesday, signaling the potential for a fifth negative day in a row.

The Dow Jones Industrial Average was little changed at Tuesday's open. The S&P 500 and Nasdaq Composite fell 0.26% and 0.54%, respectively.

—Carmen Reinicke

3M takes an important step, but it could weigh on the stock

3M announced plans Tuesday to stop making all PFAS chemicals by the end of 2025. This is "an important step" for its future," wrote Nigel Coe, an analyst at Wolfe Research in a note. But he acknowledged that the decision could weigh on the stock's performance as it is "a reminder of long-tail PFAS remediation and compensation risks."

3M shares are virtually flat in premarket trading in the wake of the news. Wolfe rates 3M shares an underperform.

Many investors will likely be surprised that 3M still makes some of these so-called forever chemcials. Coe said the company already halted production of the most troublesome ones, but it was still making shorter chain flourine-base compounds, which are deemed safer.

3M expects $1.3 billion to $2.3 billion in charges to exit this business and as much as $1 billion of those will land in the fourth quarter. The bulk will be noncash, Coe said, speculating that the charges are likely tied to the write-down of plants and property.

"This step was inevitable in light of growing actions to bar PFAS products in many jurisdictions over the next decade," said Coe.

—Christina Cheddar Berk

Netflix shares fall on news that ad-supported tier was least popular offering in November

Netflix shares fell more than 2% before the bell on news that the company's ad-supported tier is struggling to gain popularity among users.

According to data from analytics firm Antenna, first reported by The Wall Street Journal, the plan made up just 9% of new subscriber sign-ups during its first month on the market in November, and was the least popular plan among users.

Broken down, 57% of subscribers stemmed from people returning to the service or joining for the first time, while 43% priced down from more expensive options, the Journal reported.

The streaming giant rolled out the new tier in an attempt to draw new customers to its platform and build out new revenue streams.

— Samantha Subin

General Mills shares fall after earnings

Shares of General Mills fell in Tuesday premarket trading even after the food company topped profit and revenue expectations in its most recent quarter, and raised its full-year forecast.

General Mills reported earnings of $1.10 per share on revenue of $5.22 billion. Analysts polled by Refinitiv were forecasting earnings of $1.07 per share on revenue of $5.19 billion.

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— Sarah Min

QuantumScape stock jumps after EV maker starts shipping prototypes

Shares of QuantumScape jumped nearly 5% in premarket trading after the electric vehicle company announced it started shipping prototypes of its batteries to automakers.

QuantumScape has been working for years on a "solid state' battery for electric vehicles that would last longer, be lighter and have less risk of catching on fire.

The company said it would reach the key prototype milestone by year-end. Still, commercial production of the battery is years away.

Automakers receiving the prototype shipments have not yet been named.

—Carmen Reinicke, John Rosevear

Stocks moving in premarket trading

These stocks are making moves in premarket trading Tuesday.

General Mills (GIS) – General Mills reported better-than-expected profit and revenue for its latest quarter, and it raised its full-year forecast. The food producer was helped by higher prices which were only partially offset by increased input costs. The stock slid 1.3% in premarket action.

Steelcase (SCS) – Steelcase gained 3% in the premarket after the office furniture maker reported better-than-expected quarterly earnings and issued an upbeat profit forecast. Steelcase's quarterly revenue fell short of Wall Street forecasts as did its revenue forecast, however, but its backlog of orders is 3% higher than it was a year ago.

Lucid (LCID) – Lucid rallied 5.% in premarket trading after the electric vehicle maker raised more than $1.5 billion in a series of stock sales.

Read more here.

—Carmen Reinicke, Peter Schacknow

Bank of Japan holds rates steady, widens yield curve control band

The Bank of Japan held its benchmark interest rates steady and announced it will modify its yield curve control band, the central bank said in a statement.

The BOJ will expand the range of 10-year Japan government bond yield fluctuations from its current plus and minus 0.25 percentage points to plus and minus 0.5 percentage points, it said.

The adjustment is intended to "improve market functioning and encourage a smoother formation of the entire yield curve, while maintaining accommodative financial conditions," the BOJ said.

The Japanese yen strengthened more than 2% to stand at 133.37 against the U.S. dollar after the announcement.

– Jihye Lee

The days of the ‘Fed put’ are behind us, says Verdence’s Horneman

Historically, the market could count on the Federal Reserve to step in with easy policy to help limit big losses in equities, which has been known since the days of former Fed Chair Alan Greenspan as "the Fed put."

Those days may be over now, however, thanks to inflation that's expected to remain higher that it's been over the past decade and a money supple near record highs, according to Megan Horneman, chief investment officer at Verdence Capital Management.

"There is still too much liquidity that needs to be drained," she said. "This means that the days of the Fed coming in and cutting rates to zero at any sign of economic weakness are behind us. Instead, expect more volatility in economic growth and potentially more frequent mild recessions over the next decade."

— Tanaya Macheel

FuelCell rises after hours

Shares of FuelCell Energy rose more than 5% at one point in extended trading Monday night after the integrated fuel cell company announced it has completed site construction for its project on the U.S. Navy Submarine Base and commercial operations began Dec. 16.

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— Tanaya Macheel

Stock futures open flat

Stock futures opened little changed on Monday evening.

Dow Jones Industrial Average futures were lower by 18 points, or 0.05%. S&P 500 futures were down by 0.07%. Nasdaq 100 futures slipped by 0.05%.

— Tanaya Macheel