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Dow hits record; U.S. yields, dollar at multi-year highs

Published 11/23/2016, 02:16 PM
Updated 11/23/2016, 02:16 PM
© Reuters. A screen shows the Dow Jones Industrial Average after the close of trading on the floor of the NYSE in New York

By Sam Forgione

NEW YORK (Reuters) - The Dow Jones industrial average hit a record high for a third straight day on Wednesday, while U.S. two-year Treasury yields and the dollar hit multi-year peaks after upbeat U.S. economic data reinforced expectations of interest rate increases.

The Dow's peak of 19,074.51 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 U.S. President-elect Donald Trump's policies have helped boost shares.

The Dow was helped by gains in industrial stocks, with the S&P 500 industrial sector (SPLRCI) last up 0.7 percent. Ahead of the Thanksgiving Day holiday on Thursday and an early market close on Black Friday, a drop in tech heavyweights kept the S&P 500 and Nasdaq subdued, while a nearly 11 percent drop in Eli Lilly (N:LLY) also weighed on the S&P.

European shares steadied, with basic resources companies underpinning the broader market following a rise in metals prices. The European basic resources index (SXPP) ended 1.2 percent higher after hitting its highest level since mid-2015.

U.S. two-year Treasury note yields (US2YT=RR) rose to 6-1/2 year highs of 1.151 percent after data showed that U.S. 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. Fed policymakers, at a policy meeting a week before the presidential election, appeared confident the economy was strengthening enough to warrant interest rate increases soon, minutes from the Fed's Nov. 1-2 meeting showed on Wednesday.

"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 (MIWD00000PUS) fell 0.63 points, or 0.15 percent, to 412.74.

The Dow Jones industrial average (DJI) was last up 41.67 points, or 0.22 percent, at 19,065.54. The S&P 500 (SPX) was down 0.94 points, or 0.04 percent, at 2,202. The Nasdaq Composite (IXIC) was off 17.18 points, or 0.32 percent, at 5,369.17.

Europe's broad FTSEurofirst 300 index (FTEU3) closed roughly flat at 1,344.19.

The dollar index (DXY), 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.

"Speculation of a December rate hike reached mind-boggling levels," said Lukman Otunuga, research analyst at Forex Time Ltd (FXTM) in Croydon, England. "This could ensure dollar strength remains a key theme moving forward."

Oil prices were little changed in volatile trade amid investor doubts that OPEC would agree to a production cut large enough to make a significant dent in the global glut of crude.

Brent crude (LCOc1) was last down 1 cent at $49.11 a barrel. U.S. crude (CLc1) was up 6 cents at $48.09 per barrel.

© Reuters. A screen shows the Dow Jones Industrial Average after the close of trading on the floor of the NYSE in New York

Gold slid to a 9-1/2-month low of $1,181.45 an ounce. Spot gold prices were last down $20.76, or 1.71 percent, at $1,191.10 an ounce.

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