U.S. Stocks Decline as Dollar Strengthens
21 October 2016 - 3:37PM
Dow Jones News
By Riva Gold
U.S. stocks fell at the end of a choppy week.
Major indexes have swung between relatively small losses and
gains in recent days, leaving the S&P 500 near where it ended
last week.
The Dow Jones Industrial Average declined 84 points, or 0.5%, to
18078 in morning trading Friday, while the S&P 500 fell 0.4%.
The Nasdaq Composite lost less than 0.1%.
Oil prices slipped and the dollar touched multimonth highs
against the euro and Asian currencies.
Shares of Reynolds American rallied around 15% after cigarette
giant British American Tobacco said it made a $47 billion takeover
offer for the remaining stake in its U.S. peer.
Microsoft shares surged 4.5% to $59.80 after it beat forecasts
for both sales and profit Thursday, putting it on track to surpass
the company's record close of $59.56 hit during the dot-com boom in
1999.
General Electric fell 2% as its oil and gas business continued
to weigh on revenue growth in the most recent quarter.
U.S. earnings so far have mostly beat lowered expectations,
which analysts said was needed after the broader market climbed to
record highs this summer.
The Stoxx Europe 600 slipped 0.2%. Shares of British American
Tobacco rose 1.5% after news hit of its takeover offer, which would
create the world's largest listed tobacco company by revenue and
market value.
Shares in German luxury car maker Daimler fell roughly 2%
despite the company beating analyst expectations for third-quarter
profits.
Third-quarter earnings in the Stoxx Europe 600 are expected to
decline 13% from a year earlier, according to analysts' estimates
from Thomson Reuters.
For the week, the Stoxx Europe 600 was on track to gain around
1%, led by a recovery in the banking sector.
The euro fell 0.5% against the dollar to $1.0877 after touching
its lowest level since March.
Traders were digesting comments from European Central Bank
President Mario Draghi on Thursday, who denied reports that the
bank's stimulus program could end abruptly.
The euro had initially risen as Mr. Draghi said the ECB didn't
discuss extending its bond-buying program, but those gains were
quickly reversed, as investors said his comments left the door open
to extending the program at future meetings.
"Mr. Draghi was holding his cards very close to his chest," said
Salman Ahmed, chief investment strategist at Lombard Odier
Investment Managers. He expects the bank to announce an extension
to its bond-purchase program in December.
The euro has fallen roughly 3% against the dollar so far this
month.
The dollar also remained supported by growing expectations that
the Federal Reserve would raise interest rates in December. The WSJ
Dollar Index, which measures the dollar against a basket of 16
currencies, was up 0.3%.
Fed funds futures, used by investors to bet on central-bank
policy, suggest a roughly 70% chance of higher rates by the end of
the year, according to CME Group.
"We're in the midst of election fever, but for markets central
banks are way more important," said Tina Byles Williams, chief
investment officer at FIS Group.
The yield on the 10-year U.S. Treasury note was at 1.733%,
compared with 1.745% Thursday. Yields move inversely to prices.
Stocks in Asia mostly edged lower, catching up with a small
decline on Wall Street and oil's biggest daily drop since
September. U.S. crude oil fell 0.4% to $50.43 a barrel Friday.
Japan's Nikkei Stock Average declined 0.3% for the day but rose
2% this week, while Australian stocks shed 0.2% to end the week
flat.
The Shanghai Composite Index inched up 0.2%. The Chinese yuan
touched a six-year low against the dollar in trading in mainland
China, and a record low in trading outside of China at 6.7663.
The Hong Kong stock market was closed as the city shut down for
a typhoon.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
October 21, 2016 10:22 ET (14:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.