The US Dow Jones industrial average hit a record high for a third straight day yesterday, while US two-year Treasury yields and the dollar hit multi-year peaks after upbeat US economic data reinforced expectations of interestrate increases.
The Dow’s peak of 19,066.25 marked its third straight record intraday high, while the benchmark S&P 500 and Nasdaq slipped after touching record intraday and closing highs over the past two days. Expectations that markets would benefit from US President-elect Donald Trump’s policies have helped boost shares.
A 0.6 per cent drop in healthcare stocks, which had a sharp run higher following the November 8 US election, contributed to the general weakness in US shares, with Eli Lilly last down 13 per cent ahead of the Thanksgiving Day holiday today and an early market close on Black Friday.
Gains in European industrials and energy shares buoyed stocks in the region, while financials weighed on the Stoxx 600 index as Italian banks were again under pressure. Europe’s basic resources index eased from a 17-month high, but remained up about one per cent.
US two-year Treasury note yields rose to six-and-a-half year highs of 1.151 per cent after data showed that US manufactured capital goods rebounded in October, boosting expectations of faster economic growth.
Short- and intermediate-dated debt has come under pressure, partly as investors worry that the Federal Reserve may raise rates faster than previously expected. Minutes from the Fed’s last policy meeting were set to be released.
“People are in a holiday mindset today but nothing appears to be in the horizon to derail the recent market strength,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
MSCI’s all-country world equity index was last down 1.34 points, or 0.32 per cent, at 412.03.
The Dow Jones industrial average was up 22.5 points, or 0.12 per cent, at 19,046.37. The S&P 500 was down 5.29 points, or 0.24 per cent, at 2,197.65. The Nasdaq Composite was off 26.10 points, or 0.48 per cent, at 5,360.26.
Europe’s broad FTSEurofirst 300 index was up 0.12 per cent, at 1,345.76.
The dollar index, which measures the greenback against a basket of six major currencies, surged to a more than 13-year peak of 101.910, bolstered by expectations of interest rate increases by the Fed next month and in 2017.
Oil prices whipped around on investors’ doubts whether Opec would agree to a production cut large enough to make a significant dent on the global supply glut when it meets next week, and last traded slightly lower.
Brent crude was last down 16 cents, or 0.33 per cent, at $48.96 a barrel. US crude was down five cents, or 0.1 per cent, at $47.98 per barrel.