 "Traders react while working on the floor of the New York Stock Exchange (NYSE) in New York City")
The dollar rose to its highest since early February against a basket of currencies on Friday as investors increased bets on higher US interest rates, while a measure of world stocks posted their first weekly gain in four weeks despite some soft US corporate results.
On Wall Street, energy and health care stocks weighed on the S&P 500 and Dow, but Microsoft touching an all-time high moved the Nasdaq to positive territory. A potential merger between AT&T and Time Warner lifted the latter's shares to their highest in 15 years.
GE dampened sentiment after the conglomerate cut its full-year revenue growth target and narrowed its profit forecast. GE’s weak report came on the heels of lacklustre results from heavyweights such as Verizon and Travelers this week.
“If companies cannot beat estimates in this (low-rate) environment, it raises the question of what will happen when the Fed raises rates in December,” said Adam Sarhan, chief executive at Sarhan Capital.
The Dow Jones industrial average fell 16.64 points, or 0.09 per cent, to 18,145.71, the S&P 500 lost 0.18 points, or 0.01 per cent, to 2,141.16 and the Nasdaq Composite added 15.57 points, or 0.3 per cent, to 5,257.40.
World stocks, as measured by MSCI’s world index, slipped on Friday but posted their first week of gains since September. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent and the pan-European STOXX 600 index closed a hair lower.
In currencies, the euro hit a seven-month low against the dollar of $1.0858 following the European Central Bank’s decision to leave its ultra-loose policy unchanged on Thursday, keeping the door open to more stimulus in December.
“What the announcement from the ECB might’ve done is make it clear that we’re going to be in wait-and-see mode on the two most important central banks in the world until December,” said Brian Nick, chief investment strategist at TIAA Global Asset Management in New York. “And I wonder how much the market’s going to be able to move in either direction until we learn exactly what they have in store.”
The dollar also was bolstered by comments from New York Federal Reserve President William Dudley earlier this week that the Fed was prepared to raise US overnight interest rates, and by decreasing likelihood of Donald Trump winning the US presidency.
A Trump victory is seen as more likely to create uncertainty and market volatility, which could delay an interest rate increase.
