US open: Stocks up as dollar stabilises after recent gains
US stocks were higher on Friday as the dollar stabilised following gains in the wake of a more hawkish-than-expected Federal Reserve on the rate outlook this week, while oil prices advanced.
The Dow Jones Industrial Average was up 18% to 19,888.02, the S&P 500 increased 0.06% to 2,263.37 and the Nasdaq rose 0.09% to 5,461.80 at 1506 GMT.
The dollar hit its highest level since 24 December 2002 on Thursday when it reached 10.356. On Friday it was down 0.3% against the euro, 0.2% against the pound and 0.1% versus the yen, steadying after the greenback and treasury yields surged on the back of the Fed’s hawkish outlook.
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 1.24% to $54.70 a barrel and West Texas Intermediate increased 0.97% to $51.40 at 148 GMT.
Gold on Comex was gained 0.32% to 1,133.40 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 2.31% as the media company announced that chairman emeritus Sumner Redstone will resign in February.
Netflix nudged up 0.3% 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 3.99% after its second-quarter earnings on Thursday narrowly beat estimates, but revenue missed.
US-listed shares of TiGenix NV rose 14.1% a day after it priced its initial public offering.