Wall Street stocks pared their early gains on Wednesday as utility and energy shares in the US dragged, but the dollar remained higher along with major equity markets around the world as strong data suggested the global economy was picking up steam.
US factory activity hit a more than a two-year high in January and a private payrolls report shot past expectations.
Euro zone factories registered the fastest activity rate in nearly six years, China’s activity expanded for the sixth month and Japanese manufacturing growth was the fastest in almost three years.
“So far, momentum is pretty strong heading into 2017,” said Jacqui Douglas, Chief European Macro Strategist at TD Securities. “But political risks are definitely one of the biggest this year and, given the surprises we had through 2016, it’s really hard to tell what’s in store.”
The dollar rose 0.4 per cent yesterday, boosted by the stronger-than-expected reading on US employment and solid manufacturing data. It had suffered its worst January in three decades after US President Donald Trump complained that every “other country lives on devaluation,” while the US sat by “like a bunch of dummies.”
Bruised dollar bulls were also looking to the decision by the Federal Reserve later in the day that is expected to announce the central bank’s intention to raise US interest rates a number of times throughout this year.
The S&P 500 and the Dow slipped into the red at midday, ahead of the Federal Reserve’s decision on interest rates.
However, the Nasdaq, which is more technology-heavy, was lifted by a 5.6 per cent rise in Apple after the company’s strong earnings and iPhone sales.
“With a bellwether company such as Apple reporting an encouraging set of numbers, it has brought the focus of investors back on company fundamentals,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
The Dow Jones Industrial Average fell 5.03 points, or 0.03 percent, to 19,859.06, the S&P 500 lost 4.24 points, or 0.19 per cent, to 2,274.63 and the Nasdaq Composite added 12.03 points, or 0.21 per cent, to 5,626.82.
Both the pan-European FTSE 300 and the STOXX 600 indexes ended up around 0.8 per cent.
The Nikkei added 0.56 per cent and MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.36 per cent in a largely quiet session. MSCI’s index of emerging market bourses rose 0.5 per cent.