(Bloomberg) -- The dollar all but erased losses after President Donald Trump told CNBC he wants a strong dollar, countermanding comments by his Treasury secretary. U.S. stocks pared gains sparked by strong corporate earnings.
The dollar traded little changed after Trump’s comments, which ran counter to Steven Mnuchin’s endorsement of a weak greenback just a day earlier. Bloomberg’s dollar measure erased a drop of 0.4 percent, though it’s still at a three-year low. Earlier, European Central Bank President Mario Draghi said robust growth justifies a stronger euro, pushing the common currency to a three-year high. Treasuries added to gains, taking the 10-year yield to 2.62 percent.
Stocks swung between gains and losses as investors assessed the greenback’s gyrations and the impact on equities. Corporate results had set the tone, major indexes at the whim of big moves in individual stocks. Caterpillar Inc (NYSE:CAT). advanced after earnings topped estimates, while Varian Medical Systems Inc (NYSE:VAR). rallied along with 3M Co. on optimistic forecasts. Newell Brands Inc. tumbled when the company said it plans to sell off a swath of business. European equities fell as the euro gained.
Trump’s comments roiled a market where investors are already on edge as Mnuchin and Draghi engaged in unusual public discussions of currency levels. That has investors reassessing the global risk-on rally that’s stretched valuations across asset classes. So far, U.S. equities have continued to march higher amid solid corporate results, but rising currencies have threatened stock gains from Japan to Europe. Investors are also casting a watchful on the World Economic Forum, where Trump will deliver a keynote as his administration ramps up protectionist rhetoric.
Elsewhere, the MSCI Emerging Markets Currency Index hit the highest on record, while dollar weakness also boosted commodities. Bloomberg’s index of raw materials is at the highest since October 2015, and gold traded near the strongest in more than a year.
Terminal users can read more in our markets blog.
Here’s what to watch out for this week:
- Earnings season is in full swing: Intel (NASDAQ:INTC), LVMH Moet Hennessy Louis Vuitton, Starbucks (NASDAQ:SBUX) and Hyundai Motor all come this week.
- Barring any last minute changes in Washington, Trump will join world leaders and senior executives in Davos for the annual World Economic Forum.
- The U.K. House of Lords is considering Prime Minister Theresa May’s Brexit bill this week.
These are the main moves in markets:
Stocks
- The S&P 500 Index rose 0.1 percent as of 2:21 p.m. New York time.
- The Dow Jones Industrial Average rose 172 points to 26,424.23.
- The Stoxx Europe 600 Index dropped 0.6 percent.
- The U.K.’s FTSE 100 Index fell 0.4 percent.
- The MSCI Emerging Market Index gained 0.4 percent, hitting the highest in more than 10 years.
Currencies
- The Bloomberg Dollar Spot Index was little changed after hitting the lowest in more than three years.
- The euro increased 0.6 percent to $1.2479, the strongest in more than three years.
- The British pound increased 0.1 percent to $1.4258, the strongest in 19 months.
- The Japanese yen climbed 0.4 percent to 108.77 per dollar, the strongest in almost 20 weeks.
- The MSCI Emerging Markets Currency Index jumped 0.8 percent.
Bonds
- The yield on 10-year Treasuries fell one basis point to 2.64 percent.
- Germany’s 10-year yield increased two basis points to 0.61 percent.
- Britain’s 10-year yield climbed one basis point to 1.41 percent.
Commodities
- West Texas Intermediate crude increased 0.4 percent to $65.86 a barrel, the highest in almost three years.
- Gold rose 0.2 percent to $1,361.38 an ounce.