 "Photo: Reuters")
The dollar and US 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, however, traded lower.
Benchmark 10-year US Treasury notes fell 23/32 in price to yield 2.47 per cent, up from 2.39 per cent late on Wednesday. The yields reached as high as 2.496 per cent, the highest since January 3, and have jumped from a low of 2.31 per cent on Tuesday. Data showed US homebuilding rebounded in December and the number of Americans filing for unemployment benefits unexpectedly fell last week to a nearly 43-year low.
Investors were also reacting to comments by Federal Reserve Chief Janet Yellen a day ago signalling a path of steady interest rate increases, taken as a sign of economic strength.
But the data was not enough to embolden US 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 per cent since November 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 per cent on outgoing President Barack Obama's inauguration day and fell 20.4 per cent 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 per cent.
The Dow Jones Industrial Average closed down 72.32 points, or 0.37 per cent, to 19,732.4, the S&P 500 lost 8.2 points, or 0.36 per cent, to 2,263.69 and the Nasdaq Composite fell 15.57 points, or 0.28 per cent, to 5,540.08.
The dollar was up 0.2 per cent against a basket of major currencies after paring gains. It had risen as much as 8 per cent, boosted by the economic data and Yellen's comments. Yellen was due to speak again on Thursday evening.
Trading in European equities and the euro was choppy after ECB President Mario Draghi said interest rates would stay at current or lower levels for an extended period and the ECB would increase or extend bond purchases if the outlook worsens.
The euro clawed back losses against the dollar in choppy trade and was last up 0.25 percent after falling as much as 0.4 percent after Draghi's comments.
US crude settled up 0.6 per cent to $51.37 per barrel, after shedding 2.67 per cent on Wednesday. Brent crude finished up 0.5 per cent at $54.16 after settling down 2.79 per cent the day before.
Gold was up 0.1 per cent after falling as much as 0.7 per cent earlier in the day. It is on track for a 4.6 per cent gain for the month as many investors have sought a safe haven.
