Wall Street set for mixed open after BOJ’s policy surprise By Reuters

By Shubham Batra and Johann M Cherian

(Reuters) -Wall Street’s main indexes were set for a mixed open on Tuesday after the Bank of Japan surprised global investors with a policy shift that would allow long-term interest rates to rise more.

The BOJ decided to allow the 10-year bond yield to move 50 basis points either side of its 0% target, bigger than the previous 25 basis point band, against expectations of no change at its policy meeting.

Wall Street’s main indexes continued their losing streak for a fourth straight session on Monday as investors shied away from riskier bets, worried that the Federal Reserve’s interest rate hikes could push the U.S. economy into recession.

“Raising the benchmark rate is something that they have not been doing, so it looks like the world is on the same page and is having a coordinated interest rate increase to try and battle inflation,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.

“We’re slowly coming out of processing the Fed’s hawkishness. The Fed has managed to slow the economy down so it’s likely that earnings estimates (for Q4) are going to come down. By how much is the question.”

The Fed struck a hawkish tone last week at its policy meeting by saying that it expects interest rates to remain higher for longer, sparking a selloff across stock markets, particularly in the rate-sensitive technology group.

Treasuries fell following the BOJ’s shock move, with the benchmark rising to a three-week high of 3.66%. [US/]

Money market participants see a 61% chance the Fed will hike its key benchmark rate by 25 basis points in February to 4.50%-4.75%, keeping the terminal rate at 4.9% by May 2023.

Earlier, data showed U.S. single-family homebuilding tumbled in November as higher mortgage rates continued to depress housing market activity. However, overall housing starts fell only 0.5% to a rate of 1.427 million units last month, against economists’ expectation of a slide to a rate of 1.400 million units.

A slew of other economic data due this week including consumer confidence and core inflation will provide more clues to investors on future interest rate hikes.

At 8:40 a.m. ET, were up 26 points, or 0.08%, were down 3.75 points, or 0.1%, and were down 37.75 points, or 0.34%.

Lucid Group Inc rose 4.6% in premarket trading after the electric vehicle maker closed a $1.5 billion capital raise that the firm said would boost its liquidity.

General Mills Inc (NYSE:) slipped 3.0% after the Cheerios cereal maker raised its full-year earnings outlook but warned of higher raw material costs.

Gilead Sciences Inc (NASDAQ:) fell 2.6% after reporting mid-stage data on a combo cancer therapy developed with Arcus Biosciences (NYSE:), which analysts say missed investor expectations.

Nike Inc (NYSE:) slipped 0.3% ahead of its quarterly report due after the bell.