US open: Banks jump as Treasury yields head towards 2017 highs
Wall Street's main market gauges were trading mostly higher, propelled by an outsized move in lenders' shares as longer-term interest rates moved towards closer towards their 2017 highs after the Bank of Japan sprang a bit of a surprise overnight.
At 1639 GMT, the Dow Jones Industrials Average was 0.47% or 119.54 points higher, while the S&P 500 was tacking on 0.33% or 9.19 points taking it to 2,757, but alongside a dip of 0.12% or 8,62 points for the Nasdaq Composite to 7,166.
In an unexpected move, in auction overnight rate-setters in Tokyo trimmed the amount of government bond purchases.
That fed a further small bounce in the US dollar index and triggered a six basis point move higher in yields on the benchmark 10-year US Treasury note to 2.54% - its highest mark since it hit 2.63% in March of the previous year.
The pick-up in yields was reflected in gains for lenders' shares, with the KBW bank sector gauge jumping by 1.70% to 110.61 in response.
On a different note, Oanda analyst Craig Erlam said: "Friday marks the unofficial start of earnings season and given the relative lack of notable economic events at the start of the week, it’s not surprising to see little movement so far. Equity markets in the US are trading at record highs and with high expectations for earnings season already baked in, there may be an element of caution among investors who will be eagerly anticipating the first batch of results."
Acting as a backdrop, JP Morgan boss Jamie Dimon went on a limb in an interview with Fox Business, predicting US GDP growth might reach 4% in 2018.
In corporate news, e-commerce company Alibaba was a little higher after founder Jack Ma said he would consider a Hong Kong listing.
Elsewhere, Intel shares were under pressure after chief executive Brian Krzanich delivered a speech at CES late on Monday in which he outlined advances in virtual reality and other technologies, but failed to take any blame for the recent security flaws recently detected in its chips.
On the data front, the National Federation of Independent Businesses' index of small business optimism fell to 104.9 in December from 107.5 the month before, missing expectations for a reading of 108.4.
Meanwhile, the Fed's JOLTS survey revealed that the number of job openings in the States reached a six-month low in November of 5.88m.
Looking ahead to the rest of the week, investors were watching out for consumer price inflation and retail sales figures for December due out on Friday.
"At a time when questions are being asked about whether the Federal Reserve should be pursuing such aggressive tightening, these numbers are very important in determining whether such a move is warranted or should be halted," said Erlam.
Related to the above, speaking on Tuesday Minneapolis Fed chief Neel Kashkari reiterated his dovish policy bias, telling an audience the main concern at present was that inflation was going to continue being low.