Dollar slides, yields rise as investors digest Fed

Thu Mar 16, 2017 4:26pm EDT
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By Lewis Krauskopf

NEW YORK (Reuters) - The dollar sank to a five-week low on Thursday while U.S. bond yields rose as investors digested the recent U.S. interest rate increase and indications there would be no pick-up in the pace of monetary tightening.

European stock markets gained following the election victory by Dutch Prime Minister Mark Rutte, who fought off a challenge by anti-immigration, anti-European Union rival Geert Wilders.

MSCI's all-country world stock index .MIWD00000PUS gained 0.7 percent, and hit an all-time high.

On Wall Street, the benchmark S&P 500 index slipped after gaining sharply on Wednesday in the wake of the U.S. Federal Reserve's rate decision.

Fed Chair Janet Yellen pointed to growing faith in the economy's trajectory as the U.S. central bank raised rates for the second time in three months.

"Certainly, the Fed was dovish in their approach," said Bruce Bittles, chief investment strategist at Robert W. Baird in Sarasota, Florida. "The fact that the Fed raised rates, but not aggressively, but yet indicated that she had confidence in the economy certainly was a big help."

The Dow Jones Industrial Average .DJI fell 15.55 points, or 0.07 percent, to 20,934.55, the S&P 500 .SPX lost 3.88 points, or 0.16 percent, to 2,381.38 and the Nasdaq Composite .IXIC added 0.71 points, or 0.01 percent, to 5,900.76.

Traders reversed initial reaction to the Fed decision, as financials .SPSY, which sold off on Wednesday, led gains, while utilities .SPLRCU - often used as a proxy for bonds - slumped as benchmark 10-year Treasury note yields rose.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, U.S., March 16, 2017.  REUTERS/Lucas Jackson