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By Sinéad Carew
NEW YORK (Reuters) - Wall Street closed higher on Tuesday as investors waited for inflation data and worried about the prospects of slowing economic growth and the impact of policy tightening.
U.S. Treasuries rallied, with the yield on the benchmark 10-year note tumbling from a more than three-year high to below 3% as investors reassessed the inflation outlook before U.S. consumer price index (CPI) data is released Wednesday.
U.S. crude oil futures dipped below $100 a barrel to their lowest level in two weeks as the demand outlook was clouded by coronavirus lockdowns in China and growing recession concerns, while a strong dollar made crude more expensive for buyers using other currencies. [O/R]
Markets have been volatile across asset classes due to a combination of surging inflation and fears that monetary tightening aimed at slowing price increases would cause a slowdown in global economic growth.
Last week, central banks in the United States, Britain and Australia raised interest rates and investors girded for more tightening as policymakers fought soaring inflation. [.N]
After turning red for a few hours earlier in the session, the S&P closed up slightly while Nasdaq added almost 1%. Technology, the market's biggest growth sector, was leading gains as investors reacted to falling bond yields and bounced back after a furious sell-off on Monday.
"If we've seen the worst of the rate of change from long-term interest rates, it may create room for equities to do a little bit better," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in St. Louis.
The Dow Jones Industrial Average fell 84.96 points, or 0.26%, to 32,160.74, the S&P 500 gained 9.81 points, or 0.25%, to 4,001.05 and the Nasdaq Composite added 114.42 points, or 0.98%, to 11,737.67.
MSCI's gauge of stocks across the globe gained 0.08%.
Matthew Miskin, co-chief investment strategist at John Hancock Investment Management, was reassured by policy makers including Cleveland Federal Reserve Bank President Loretta Mester. While Mester said unemployment may increase and growth may slow, she added that tightening should not cause a "sustained downturn."
"They've been so hawkish so any slight move off that the market wants to sniff that out," said Miskin. "Sentiment wise, a lot of people are looking for capitulation. The dots aren't completely connecting yet for that."
The U.S. dollar was choppy on Tuesday but held near a two-decade high ahead of the hotly anticipated inflation data which could provide insight on the Fed policy path.