US close: Stocks edge lower even as dollar stabilises
Wall Street finished lower on Friday even as the dollar and government bond yields stabilised following gains in the wake of a more hawkish-than-expected Federal Reserve over the week, while oil prices advanced.
The Dow Jones Industrial Average off 0.04% to 19,843.41, the S&P 500 declined 0.18% or 3.96 points to 2,258.07 and the Nasdaq was off 0.36% to 5,437.16.
The dollar hit its highest level since 24 December 2002 on Thursday, with the US dollar spot index reaching 103.02. On Friday, it was down to 102.95, steadying after the greenback and treasury yields surged on the back of the Fed’s hawkish outlook, with the yield on the benchmark 10-year US Treasury note little changed at 2.59%.
On Wednesday, the Fed raised rates by 25 basis points to a target range between 0.50% and 0.75%, and surprised with a forecast of a further three rate hikes next year.
Michael Hewson, chief market analyst at CMC Markets, said: “The dollar is pausing for breath on some of its recent gains after hitting multi year highs against a basket of currencies. A softening in bond yields is also helping in this regard with gains for the euro after it hit multi year lows against the greenback.”
Meanwhile, oil prices were in the green as Brent crude rose as West Texas Intermediate increased 80 cents to $51.90 per barrel.
Gold on Comex gained $7.40 to 1,137.40 per troy ounce.
Hewson added that the big question was whether the Dow could hit the 20,000 level that it has been flirting with this week.
“Thus far it has fallen short and the likelihood is that the opportunity to do it this week has passed. Even if we fall short we’ve still seen a decent week for US equities, trading as they continue to do at record levels. The big question is how a strong dollar and a strong US equity market can co-exist at a time when all we have had at the moment is promises of fiscal action, and higher rates.
“Since 8 November the Dow has rallied 9%, the S&P 500 over 6% and the Russell 2000 has gained over 14%, how much of market expectations of what President-elect Trump can deliver are now priced in," he said.
On the data front, housing starts dropped 18.7% in November, from a nine-year high, to a seasonally adjusted rate of 1.09m, from 27.4% the previous month. This was more than the expected 7% fall.
Permits of housing in the pipeline fell 4.7% to 1.2m, from 2.9% in September. Analysts had expected a 1.6% decline.
In corporate news, Viacom was up 1.28% as the media company announced that chairman emeritus Sumner Redstone will resign in February.
Netflix edged lower 0.62% even after the company announced late on Thursday that it has inked an exclusive deal to stream all the films of Bollywood superstar Shah Rukh Khan.
Software company Oracle was down 4.31% after its second-quarter earnings on Thursday narrowly beat estimates, but revenue missed.
US-listed shares of TiGenix NV rose 7% a day after it priced its initial public offering.
Dow Jones - Risers
Unitedhealth Group Inc. (UNH) $163.94 2.07%
General Electric Co. (GE) $31.75 1.57%
Travelers Company Inc. (TRV) $121.60 1.00%
Verizon Communications Inc. (VZ) $52.27 0.89%
Chevron Corp. (CVX) $118.08 0.88%
3M Co. (MMM) $177.45 0.81%
McDonald's Corp. (MCD) $123.24 0.72%
Boeing Co. (BA) $154.50 0.47%
Coca-Cola Co. (KO) $41.74 0.46%
United Technologies Corp. (UTX) $108.52 0.36%
Dow Jones - Fallers
Caterpillar Inc. (CAT) $92.58 -2.06%
Goldman Sachs Group Inc. (GS) $238.90 -1.69%
Visa Inc. (V) $78.35 -1.45%
Intel Corp. (INTC) $36.31 -1.30%
JP Morgan Chase & Co. (JPM) $84.94 -1.23%
International Business Machines Corp. (IBM) $166.73 -0.77%
Nike Inc. (NKE) $50.92 -0.72%
Home Depot Inc. (HD) $135.11 -0.54%
Walt Disney Co. (DIS) $103.91 -0.46%
Microsoft Corp. (MSFT) $62.30 -0.45%