Dollar, bond yields up on strong U.S. data; Wall Street dips

Thu Jan 19, 2017 4:37pm EST
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By Sinead Carew

NEW YORK (Reuters) - The dollar and U.S. Treasury yields gained on Thursday after a batch of solid economic data, while Wall Street indexes slipped as investors held back a day ahead of the inauguration of President-elect Donald Trump.

Oil futures rallied from one-week lows after the International Energy Agency said crude markets were tightening. The S&P 500's energy index .SPNY, however, traded lower.

Benchmark 10-year U.S. Treasury notes US10YT=RR fell 23/32 in price to yield 2.47 percent, up from 2.39 percent late on Wednesday. The yields reached as high as 2.496 percent, the highest since Jan. 3, and have jumped from a low of 2.31 percent on Tuesday. Data showed U.S. homebuilding rebounded in December and the number of Americans filing for unemployment benefits unexpectedly fell last week to a near 43-year low.

Investors were also reacting to comments by Federal Reserve Chief Janet Yellen a day ago signaling a path of steady interest rate increases, taken as a sign of economic strength.

But the data was not enough to embolden U.S. equity investors, who were wary as they waited to see if Trump acts on pro-business promises such as tax cuts, fiscal stimulus and lighter regulation that had sent the S&P 500 up 5.8 percent since Nov. 8, one of the strongest transitions in history.

"There's been a lot of positive news priced into the market so it's taking a break on the equities side," said Wade Balliet, Chief Investment Strategist, Bank of the West, based in Denver who said investors are "getting nervous trying to piece together what the policies will be."

Investors shouldn't expect clarity from the inauguration speech but would hope for signals in coming weeks, Balliet said.

The S&P 500 sank 5.3 percent on outgoing President Barack Obama’s inauguration day and fell 20.4 percent in the first 34 trading days of his administration, bottoming on March 9, 2009. But it has nearly tripled from that low, and including reinvested dividends has delivered a total return of nearly 295 percent.   Continued...

A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., January 19, 2017. REUTERS/Stephen Yang