The dollar and US Treasury yields gained yesterday after a batch of solid US economic data, while US shares slipped as investors remained cautious ahead of the inauguration of President-elect Donald Trump today.
Oil futures rallied from one-week lows after the International Energy Agency said crude markets were tightening. The S&P 500’s energy index, however, traded lower.
Benchmark 10-year Treasury notes fell 27/32 in price to yield 2.49 per cent, up from 2.39 per cent late on Wednesday.
Yields had hit their highest since January 3 after data showed US homebuilding rebounded in December and the number of Americans filing for unemployment benefits unexpectedly fell last week to a near 43-year low.
But the data was not enough to embolden US equity investors, who were holding fire ahead of the inauguration as they wait to see if Mr Trump will carry through on pro-business promises such as tax cuts, fiscal stimulus and lighter regulation that had sent stocks soaring after the election.
“We may give Trump the benefit of doubt in the first hundred days,” said Sam Stovall, chief investment strategist at CFRA Research. “But unless we see some legislation being passed through Congress, this hype might turn into gripe and end up being a trigger for the digestion of gains.”
At 1:53PM ET, the Dow Jones Industrial Average was down 55.74 points, or 0.28 per cent, to 19,748.98, the S&P 500 had lost 6.28 points, or 0.276422 per cent, to 2,265.61 and the Nasdaq Composite had dropped 9.81 points, or 0.18 per cent, to 5,545.84.
The dollar rose 0.5 per cent against a basket of major currencies, boosted by the solid US data and Federal Reserve Chief Janet Yellen comments a day ago about a path of steady interest rate increases, signaling economic strength.
Ms Yellen was due to speak again yesterday evening.
Trading in European equities and the euro was choppy after ECB President Mario Draghi reaffirmed interest rates would stay at current or lower levels for an extended period and that the central bank was ready to increase or extend bond purchases if the outlook worsens.
The FTSEurofirst 300 index of European companies closed down 0.12 per cent after falling as much as 0.4 per cent earlier in the session.
The euro clawed back losses against the dollar in choppy trade and was last up 0.06 per cent after falling as much as 0.4 per cent after Draghi’s comments.
The pound was up 0.3 per cent at $1.2304 after a wild few Brexit-fueled days that saw its biggest rise in decades against the dollar and two of its heaviest slumps in months.
US crude added 0.7 per cent to $51.42 per barrel, after shedding 2.67 per cent on Wednesday. Brent crude rose 0.6 per cent to $54.28 after settling down 2.79 per cent the day before.
Gold was down 0.2 per cent on track for his second day of declines after falling as much as 0.7 per cent.