By Chuck Mikolajczak

NEW YORK (Reuters) – A gauge of global stocks rose for a second straight day on Tuesday to reach its highest since early February as the pace of U.S. earnings season picked up, while Treasury yields dipped after three straight sessions of gains.

On Wall Street, the S&P 500 closed roughly unchanged. A 1.70% drop in Goldman Sachs after its quarterly results, as well as a 2.81% decline in Johnson & Johnson weighed on the Dow Jones Industrial Average to leave it almost unchanged, offsetting gains in Home Depot and Boeing.

Graphic: Goldman Sachs earnings – https://www.reuters.com/graphics/EARNINGS-AUTOMATED/GS-N/zjvqjazeapx/chart_eikon.jpg

Goldman peer Bank of America veered between gains and losses in choppy trading after its earnings beat estimates, and was last up 0.63%.

“Earnings season so far has actually been better than expected by far on both earnings and revenues,” said Randy Frederick, managing director, trading and derivatives at Charles Schwab in Austin, Texas.

“I had a feeling when the beginning of this earnings season started that we might have set the expectations bar a little too low, that seems to be the case so far. The results aren’t spectacular, but the expectations bar was set pretty low.”

The Dow Jones Industrial Average fell 10.55 points, or 0.03%, to 33,976.63 the S&P 500 gained 3.55 points, or 0.09%, to 4,154.87 and the Nasdaq Composite dropped 4.31 points, or 0.04%, to 12,153.41.

European shares closed higher, in part due to solid economic data from China, led by gains in travel and leisure stocks, and the STOXX 600 closed at its highest level since Feb. 11, 2022.

The pan-European STOXX 600 index rose 0.38% and MSCI’s gauge of stocks across the globe gained 0.24%. MSCI’s index had earlier reached its highest level since Feb. 3 at 658.29.

Investors have turned their focus to corporate earnings as the market has largely priced-in a 25 basis points rate hike from the Federal Reserve at its May meeting, according to CME’s FedWatch Tool, with expectations standing a level of more than 83%.

St. Louis Federal Reserve President James Bullard said on Tuesday in an interview with Reuters that the Fed should continue hiking interest rates as recent data has shown persistent inflation in an economy that is likely to continue to grow.

However, Atlanta Federal Reserve President Raphael Bostic said in an interview with CNBC the Fed most likely only has one more hike ahead.

Longer-dated U.S. Treasury yields dipped, with the benchmark 10-year falling for the first time after three straight sessions of gains, as investors weighed whether the Fed would pause its rate hike cycle after the May meeting.

The yield on 10-year Treasury notes was down 1.3 basis points to 3.578% while the two-year U.S. Treasury yield, which typically moves in step with rate expectations, was up 2.8 basis points at 4.216%.

The dollar was weaker against most major currencies after the data from China, while the pound strengthened against the greenback thanks to pay growth data in Britain boosting expectations the Bank of England will raise rates in May.

The dollar index fell 0.362%, with the euro up 0.39% to $1.0969.

The Japanese yen strengthened 0.32% versus the greenback at 134.05 per dollar, while Sterling was last trading at $1.2426, up 0.42% on the day.

Oil prices were little changed, as the upbeat China data was countered by concerns that rising rates could dent the growth outlook and sap demand.

U.S. crude settled up 0.04% at $80.86 per barrel and Brent was at $84.77, up 0.01% on the day.

(Reporting by Chuck Mikolajczak, Editing by Nick Zieminski and Deepa Babington)

---