Dollar hits 13-year high as stocks dip slightly after recent gains
US stocks finished barely lower on Wednesday as banks return some of the huge gains they have made since the presidential election last week, but technology and consumer stocks climbed.
The dollar continued to appreciate against other currencies and reached its highest mark in 13 years.
Banks took the biggest losses as a seven-day rally in that sector petered out. Industrial companies, also big gainers since the election, traded lower as well. The price of oil gave back some of its enormous gain from the day before.
Graphics processor maker Nvidia and household names like Apple and Microsoft led technology companies higher. Rising stocks outnumbered decliners.
The dollar has been very strong in recent years, just not this strong, and it's been pretty stable compared to other currencies. But in the wake of the election, investors think the US economy might grow a bit faster and inflation might pick up.
"What's pushed the dollar higher here in the short term is with the Trump win, particularly combined with (Republicans) holding on to the Senate," said Scott Wren, a senior global equity strategist at the Wells Fargo Investment Institute. Still, Mr Wren does not think the dollar will rise much further.
The Dow Jones industrial average slid 54.92 points, or 0.3%, to 18,868.14. The Standard & Poor's 500 index lost 3.45 points, or 0.2%, to 2,176.94. The Nasdaq composite picked up 18.96 points, or 0.4%, to 5,294.58.
After a long losing streak before the election, the Dow had risen for seven days in a row through Tuesday and set several all-time highs. The S&P 500 and Nasdaq have also made large gains and are near the records they set this autumn.
JPMorgan Chase led banks lower as it fell 1.96 dollars, or 2.5%, to 77.40 dollars and Morgan Stanley lost 81 cents, or 2%, to 39.19 dollars. Banks are coming off their best single week since the financial crisis as investors hope for higher interest rates and more profits from lending, as well as cutbacks in regulations that could boost bank profits.
The ICE U.S. Dollar Index, which measures the dollar against six other currencies, rose to its highest level since April of 2003. The dollar is rising in part because investors think the Federal Reserve will raise interest rates at a faster pace in response to inflation stemming from the increased spending that President-elect Donald Trump has proposed.
A stronger dollar hurts US companies that do a lot of business overseas because it makes their products more expensive, and it affects their earnings when they are translated from other currencies back into U.S. dollars. However it makes imported goods cheaper for consumers in the US.
The dollar slipped 109.15 Japanese yen from 109.32 yen late on Tuesday. The euro slid to 1.0681 from 1.0718 dollars.
Technology companies moved upward as they continued a rally from a day earlier. Graphics processor maker Nvidia rose 5.44 dollars, or 6.3%, to 91.63 after it announced a collaboration with Microsoft, and Apple picked up 2.93, or 2.7%, to 110.04 dollars.
Tech stocks had weakened since the election. Mr Trump's policies might affect their sales in China and other key markets, and a big surge this summer had brought some technology stocks to all-time highs.
Retailer Target raised its profit forecast and its sales projections for the third quarter with the holiday season approaching. That came as the retailer gave a strong third-quarter report, as it put more emphasis on low prices after it stumbled in the second quarter. The stock gained 4.59 dollars, or 6.4%, to 76.03 dollars.
TJX, the parent of TJ Maxx and Marshalls, reported a bigger profit and better sales than investors expected and its stock gained 2.90 dollars, or 3.9%, to 76.39 dollars. That helped lead consumer stocks higher.
Home improvement retailer Lowe's fell after it said traffic in stores was low during the third quarter, and Lowe's reported a smaller third-quarter profit because of several big charges. Lowe's lost 2.03 dollars, or 2.9%, to 67.02 dollars.
Oil prices slipped. Benchmark US crude lost 24 cents to 45.57 dollars a barrel in New York. Brent crude, which is used to price international oils, fell 32 cents to 46.63 dollars a barrel in London. The price of US crude oil soared on Tuesday as investors hoped the oil-producing Opec countries will agree to a production cut that would boost prices.
Energy companies fell. They had rallied on Tuesday along with the price of crude oil.
Bond prices rose. The yield on the 10-year Treasury note slipped to 2.21% from 2.22%. Bond yields, which are used to set interest rates on many kinds of loans including mortgages, have risen to their highest levels since the beginning of the year as investors expect inflation to rise. Bond investors hate inflation because it erodes the value of the fixed interest payments that bonds pay.
In other energy trading, wholesale petrol fell two cents to 1.32 dollars a gallon. Heating oil fell one cent to 1.44 dollars a gallon. Natural gas rose six cents, or 2%, to 2.76 dollars per 1,000 cubic feet.
The price of gold slipped 60 cents to 1,223.90 dollars an ounce. Silver fell 12 cents to 16.93 dollars an ounce. Copper fell four cents to 2.47 dollars a pound.
In Germany the Dax lost 0.7% while France's CAC 40 was off 0.8%. Britain's FTSE 100 slid 0.6%. Asian markets finished mostly higher. Japan's Nikkei jumped 1.1% and the Kospi in Seoul, South Korea gained 0.6%. Hong Kong's Hang Seng index closed 0.2% lower.