Global Stocks Rebound, Dollar Steadies After Manufacturing Boost
The global stock market is showing signs of recovery, with a key gauge pushing higher on Friday, despite being on track for a weekly decline. Meanwhile, the dollar has steadied after a recent rally, thanks to a stronger-than-expected U.S. manufacturing survey.
U.S. Stocks Rise, Breaking Five-Day Losing Streak
U.S. stocks are on the upswing, with the S&P 500 and Nasdaq attempting to snap a five-session streak of declines, their longest since mid-April. The gains are broad-based, with all 11 major S&P sectors in the black, led by utilities.
Dollar’s Recent Rally Supported by Manufacturing Data
The U.S. currency has been rallying since late last year, driven by expectations of growth and inflation under President-elect Donald Trump’s policies. This has led investors to reduce expectations for further rate cuts from the Federal Reserve and higher yields on U.S. Treasuries. The latest manufacturing data has provided additional support to the dollar, which is now on track for its biggest weekly percentage gain since mid-November.
Investors Focus on Inflationary Pressures
As the market continues to digest the implications of Trump’s policies, investors are increasingly focused on the potential for inflationary pressures. “The main issue people will start focusing on is if his decisions will be inflationary and, if they are, does that signal that the Fed will do an abrupt course change and start raising rates,” said Peter Andersen, founder of Andersen Capital Management.
Global Markets Roundup
The Dow Jones Industrial Average rose 174.10 points, or 0.41%, to 42,565.96, while the S&P 500 rose 35.43 points, or 0.60%, to 5,904.03. The Nasdaq Composite rose 151.10 points, or 0.78%, to 19,431.27. In Europe, equities were lower, with the pan-European STOXX 600 index off 0.5%. Trading volumes were light at the end of a holiday-shortened week.
Currency Markets Update
The dollar index fell 0.05% to 109.18, but pared losses after the manufacturing data. The euro was up 0.11% at $1.0276, while the British pound strengthened 0.07% to $1.2389. Against the Japanese yen, the dollar weakened 0.04% to 157.46.
Bond Yields and Commodities
The yield on benchmark U.S. 10-year notes was down 0.4 basis point at 4.573%, remaining above the 4.5% mark that has proven problematic for equities. U.S. crude rose 0.83% to $73.74 a barrel, and Brent rose 0.46% to $76.28 per barrel, supported by colder European and U.S. weather and additional economic stimulus announced by China.
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