By Stephen Culp
NEW YORK (Reuters) -U.S. stocks extended their rally and the dollar strengthened as solid data helped investors look past notes of caution from world central bank leaders regarding mounting economic uncertainties and U.S. President Donald Trump’s erratic tariff policies.
U.S. data showed jobless claims holding steady and an unexpected increase in existing home sales, which helped calm fears that the economy is softening, despite the U.S. Federal Reserve’s lowered economic projections released on Wednesday.
Wall Street turned positive following the home sales data, the dollar strengthened and crude prices advanced as signs of strong demand offset simmering tensions in the Middle East.
Straight on the heels of the Fed’s decision to hold rates steady, the Bank of England (BoE) followed suit, holding its key interest rate steady while cautioning against assumptions it would cut rates in the near future as it grapples with economic uncertainties.
The Swiss National Bank cut its rate to near zero but flagged increasing worries over the global impact of Trump’s trade policies, while Sweden’s central bank predicted it would keep current rates in place in the near term and remain agile in its response to global economic developments.
“Trump’s rhetoric and his actions have forced other countries to the bargaining table,” says Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois. “But what are the implications? There’s a ton of dust in the air right now.”
“(It’s) creating a lot of consternation … in international markets, and it’s left to the bankers to figure out how to react,” Nolte added.
Turkey’s central bank, on the other hand, hiked its overnight lending rate to 46% on an interim basis after the lira plunged in the wake of the arrest of President Tayyip Erdogan’s main political rival.
The Dow Jones Industrial Average rose 216.53 points, or 0.52%, to 42,181.83, the S&P 500 rose 21.77 points, or 0.38%, to 5,697.06 and the Nasdaq Composite rose 87.69 points, or 0.50%, to 17,839.05.
European stocks turned negative, weighed down by banks as market participants mulled the BoE’s note of caution.
Europe’s broad FTSEurofirst 300 index fell 7.01 points, or 0.32%.
MSCI’s gauge of stocks across the globe rose 1.36 points, or 0.16%, to 846.73.
The pan-European STOXX 600 index fell 0.36%, while Emerging market stocks fell 3.43 points, or 0.30%, to 1,139.86. MSCI’s broadest index of Asia-Pacific shares outside Japan closed lower by 0.2%, to 592.74, while Japan’s Nikkei fell 93.54 points, or 0.25%, to 37,751.88.
The greenback advanced after the Fed indicated it was in no rush to cut its key policy rate, while the pound remained soft in the wake of the BoE’s decision to stand pat.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.58% to 103.98, with the euro down 0.67% at $1.0828.
Against the Japanese yen, the dollar strengthened 0.01% to 148.69.
In cryptocurrencies, bitcoin gained 0.45% to $85,761.79. Ethereum declined 1.95% to $1,995.26.
U.S. Treasury yields weakened after Fed Chair Jerome Powell indicated that the central bank is poised to act in the case of an economic slowdown.
The yield on benchmark U.S. 10-year notes fell 4.8 basis points to 4.208%, from 4.256% late on Wednesday.The 30-year bond yield fell 4.9 basis points to 4.5175% from 4.567% late on Wednesday.
The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 2.8 basis points to 3.951%, from 3.979% late on Wednesday.
Oil prices reversed initial losses following upbeat U.S. economic data and amid renewed tensions in the Middle East.
U.S. crude rose 1.55% to $68.20 a barrel and Brent rose to $71.84 per barrel, up 1.5% on the day.
Gold prices paused after the safe-haven metal touched all-time highs earlier in the session.
Spot gold fell 0.28% to $3,038.62 an ounce. U.S. gold futures rose 0.08% to $3,038.20 an ounce.
(Reporting by Stephen Culp; Additional reporting by Marc Jones in London; Editing by Joe Bavier)
