In the wake of the Bank of Japan's surprising hawkish flip, indices pared their losses on Tuesday but failed to find direction.

As Treasury rates resumed their ascent higher in the wake of the Bank of Japan's surprising hawkish flip, indices pared their losses on Tuesday but failed to find direction.

The S&P 500 increased by 0.1%, the Dow Jones increased by 0.2%, and the Nasdaq ended flat.

Investors were alarmed by the Bank of Japan's announcement that it would let an increase in 10-year Japanese government yields of up to 50 basis points, or 0.5%.

Commerzbank stated in a note that this was an increase from the previous 25 basis point cap and is the BoJ's "first move toward tighter monetary policy by extending the target range for bond yield."

Gains in rate-sensitive industries like technology were restrained by the rise in rates on global bonds, including Treasuries, due to the rise in Japanese government bond yields.

However, as oil prices extended their gains from the previous day, bolstered by a weaker dollar, rising energy stocks helped keep the overall market moving higher.

The biggest sector gainers included ConocoPhillips, Schlumberger NV, and Halliburton Company.

General Mills Inc. raised its earnings guidance in the meanwhile and reported better-than-anticipated second-quarter results. But its stock fell by 3%.

The largest drag on the overall market was consumer stocks, with Tesla leading the fall after Evercore ISI lowered its price objective on the electric vehicle manufacturer from $300 to $200 due to worries about future declines after the stock failed to remain above a crucial level of support.

Investors were anticipating sportswear giant Nike's quarterly earnings, which were coming after the closing bell and could provide additional information on the strength of the consumer, while retailers such as VF Corporation and Ralph Lauren were feeling the pressure.

In other news, according to recent housing data, the pain of sky-high mortgage rates as a result of this year's rapid pace of Federal Reserve rate hikes is still evident in the economy.

Although housing starts in November exceeded expectations, permits—a sign of activity for upcoming projects—fell to an 18-month low, raising concerns about the additional negative activity.

(Sources: investing.com, reuters.com)