NEW YORK (Reuters) - The U.S. dollar index touched its highest since April on Tuesday on growing expectations the Federal Reserve will raise interest rates next month, while U.S. stocks ended up after a late-session bounce.
Oil prices ended higher, rebounding after the International Energy Agency estimated investment in oil would slump more than 20 percent this year, a trend it saw continuing into 2016.
Consumer discretionary shares including Amazon.com (AMZN.O) bolstered the S&P 500, though a drop in Apple (AAPL.O) limited the index’s advance. World stock indexes slipped as persistent global growth concerns weighed on sentiment.
A bigger-than-expected fall in Chinese inflation following disappointing trade figures over the weekend underlined the problems in an economy that has driven world growth for a decade. But the data also added to expectations of more stimulus measures from Beijing to counter any slowdown.
Equities investors also were preparing for a possible Fed rate hike in December. Friday’s strong U.S. jobs report boosted expectations the Fed will raise rates next month.
“We could face a little more of this kind of trading as we see people position around the idea of a rate increase,” said Kurt Brunner, a portfolio manager at Swarthmore Group in Philadelphia. “Over the next couple weeks it could be a little sloppy before we head into Thanksgiving.”
The Dow Jones industrial average .DJI rose 27.73 points, or 0.16 percent, to 17,758.21, the S&P 500 .SPX gained 3.14 points, or 0.15 percent, to 2,081.72 and the Nasdaq Composite .IXIC dropped 12.06 points, or 0.24 percent, to 5,083.24.
Apple shares fell 3.2 percent to $116.77 after Credit Suisse said the iPhone maker had lowered component orders by as much as 10 percent.
MSCI’s all-country world index .MIWD00000PUS dipped 0.2 percent, while European shares .FTEU3 closed up 0.2 percent, supported by a weak euro.
The dollar climbed to touch a 6-1/2-month high against the euro EUR= and a seven-month peak against the Swiss franc CHF=, while the dollar index .DXY, which measures the greenback against a basket of currencies, hit its highest since April, rising 0.4 percent to 99.371 and outpacing Friday’s post-jobs report highs. The index was last up 0.2 percent.
Bullish bets on the dollar have grown as an improving U.S. economy have bolstered expectations the Fed would raise rates at its Dec. 15-16 meeting.
At the same time, the dollar’s gains pressured gold, with spot gold XAU= down 0.3 percent at $1,088.06 an ounce.
U.S. Treasuries prices rose, with benchmark yields retreating from a more than three-month peak on demand from investors seeking bargains after a market selloff on worries about the Fed raising rates in December.
Benchmark 10-year Treasury notes US10YT=RR were up 6/32 in price, erasing a modest decline earlier. The 10-year yield was 2.320 percent, down 2 basis points from Monday. It reached 2.377 percent on Monday, its highest intraday level since July 21, according to Reuters data.
In the oil market, U.S. crude CLc1 settled up 34 cents at $44.21 a barrel, while Brent crude LCOc1 rose 25 cents to settle at $47.44.
Additional reporting by Richard Leong in New York and Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski and James Dalgleish