NEW YORK (Reuters) - The yen lost ground against the U.S. dollar on Thursday amid speculation Japan could expand its monetary stimulus soon, while a drop in Apple shares dragged the Nasdaq lower in a volatile trading day.
Oil prices settled higher after a roller-coaster session that saw U.S. crude touch a six-month high. U.S. Treasury prices fell after comments from a Federal Reserve official suggested interest rates could rise faster than some investors expect.
Major U.S. stock indexes closed mixed. The Dow Jones industrial average .DJI rose 9.38 points, or 0.05 percent, to 17,720.5 and the S&P 500 .SPX lost 0.35 points, or 0.02 percent, to 2,064.11.
The Nasdaq Composite .IXIC dropped 23.35 points, or 0.49 percent, to 4,737.33.
Stocks had posted sharp declines on Wednesday following a strong rally a day earlier.
"Volatility has made a huge comeback," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. "There seems to be a lack of confidence about a sustained rally."
Apple (AAPL.O) shares fell 2.4 percent to a two-year low on concerns about iPhone demand. The stock was the biggest drag on all three major indexes.
"While we are technically still in a bull market, it’s been more of a consolidation for the past year, so when you see your leaders like that turn lower, I think people get a little bit concerned," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
Gains in consumer staples and telecommunications shares helped counter Apple.
Data showed the number of Americans filing for unemployment benefits unexpectedly rose last week to the highest in more than a year, but economists blamed striking telecommunications workers for the surge.
The pan-European FTSEurofirst stocks index .FTEU3 shed 0.6 percent. Shares were weighed down by some disappointing results, including from Dutch insurer Aegon (AEGN.AS) and French bank Credit Agricole (CAGR.PA).
MSCI's global gauge of stocks .MIWD00000PUS fell 0.2 percent. The index is off less than 1 percent for 2016, with stocks rebounding after a rough start to the year but little changed in recent weeks.
Concerns about the global economy persist and investors are responding to diverging policies between the Federal Reserve and other major central banks.
The yen JPY= fell 0.6 percent against the dollar, pressured by speculation the Bank of Japan could expand its monetary stimulus as soon as next month.
Against a basket of currencies including the yen, the dollar .DXY gained 0.4 percent.
Oil prices gained in a volatile session as investors weighed a forecast for tighter global supplies against signs of another storage build at the hub for U.S. crude futures.
Brent crude LCOc1 settled up 1 percent at $48.08 per barrel. U.S. crude's WTI CLc1 settled up 1 percent at $46.70. It hit a six-month high of $47.02 earlier.
Oil prices have recovered some ground after touching 12-year lows earlier in 2016.
U.S. Treasury prices fell after a Fed official said the U.S. central bank should raise interest rates if data confirms a stronger jobs market and inflation outlook in the second quarter, noting that markets are too pessimistic on the economy.
The comments by Boston Fed President Eric Rosengren, a voting member this year on the Fed's rate-setting committee, point to growing pressure within the U.S. central bank to raise rates in the coming months.
"The market remains too pessimistic about the fundamental strength of the U.S. economy, and the likelihood of removing monetary accommodation is higher," Rosengren said.
Benchmark 10-year notes US10YT=RR were last down 7/32 in price to yield 1.7516 percent, up from 1.73 percent late on Wednesday.
Additional reporting by Karen Brettell, Gertrude Chavez-Dreyfuss and Barani Krishnan in New York; Editing by James Dalgleish and Nick Zieminski