Dow Flirts With 20,000, Dollar Gains on Jobs Data: Markets Wrap
By Jeremy Herron, Bloomberg News
The latest signs of strength in the U.S. labor market reignited the dollar rally and put the Dow Jones Industrial Average back on course for 20,000. Treasuries tumbled with gold as strong hiring bolstered the case for higher interest rates.
The Dow rose within one point of the round-number milestone and the S&P 500 Index climbed to a record, as American equities headed for the best week in a month. The Bloomberg Dollar Spot Index halted a two-day slide and turned toward a 14-year high. The yield on the 10-year Treasury note jumped after falling nine basis points Thursday. Oil slipped below $53 a barrel in New York, and gold retreated from a four-week high.
Evidence of a healthy U.S. labor market helped the dollar recoup some losses as investors speculate growth in the world’s largest economy is poised to accelerate. Equities looked to break out of a monthlong range after a post-election rally stalled when the Fed raised rates and doubts arose that Donald Trump will usher in an era of higher government spending. Mohamed El-Erian said in a Bloomberg TV interview that the jobs report will encourage the Fed to proceed with raising interest rates, though he cautioned that a strong dollar could weigh on growth.
“This is quite a healthy number overall and justifies the market reaction,” said Gennadiy Goldberg, an interest-rate strategist at TD Securities. “The selloff in Treasuries has further to go. So far we’ve been trading on expectations. Once you see Congress tabling plans and Trump taking office the market could definitely react to that and extend the selloff in bonds.”
The S&P 500 Index rose 0.5 percent 2,280.70 at 2:17 p.m. in New York, poised to top its record close from Dec. 13, the day before the Fed tightened. It’s up 1.9 percent in the week, the most in a month. The Dow climbed to 19,9991 and is higher by 1.2 percent in the week. The MSCI All-Country World Index slipped 0.1 percent to pare a weekly gain to 1.7 percent. The Stoxx Europe 600 Index fell 0.1 percent, trimming a weekly advance, as commodity producers declined.
The Bloomberg Dollar Spot Index rose 0.6 percent after falling 1 percent Thursday. The offshore yuan fell 0.6 percent to 6.8304 per dollar after a four-day climb. The euro dropped 0.5 percent to $1.0551 and the pound retreated 0.5 percent to $1.2354. Turkey’s lira was down 0.8 percent after touching a record low Thursday.
Crude rose 0.7 percent to $54.12 a barrel in New York. Gold fell 0.6 percent to $1,173.80 an ounce. Copper slipped 0.6 percent and natural gas futures slid 0.7 percent.
The biggest rally in U.S. Treasuries since June 27 was brought up short, with the yield on the 10-year benchmark up rising back toward 2.4 percent after sliding nine basis points Thursday.