US stocks slipped after a post-election rally took benchmark gauges to record levels on speculation that interest rates will rise amid expectations for brisker economic growth.
The S&P 500 Index fell 0.3 per cent to 2,181.31 at 12:28 pm in New York, after climbing within two points of its August 15 record of 2,190.15. The gauge is headed for a weekly gain of 0.8 per cent.
The Dow Jones Industrial Average slipped, while the Russell 2000 Index edged higher and headed for its longest winning streak since 2003. The Nasdaq Composite Index rose to its first all-time high since September before trading little changed.
Speculation that Donald Trump’s administration will carry out fiscal stimulus has lifted industries perceived to benefit from economic growth, with banks and small caps leading gains. Federal Reserve Chair Janet Yellen said yesterday the central bank is close to boosting rates, aiding a rally in the dollar that’s left it at the highest level since February. The greenback’s strength has weighed on companies that generate sales overseas.
“The markets are looking at the potential of a Trump stimulus,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “They’re thinking the US is going to do well, but the problem is that the dollar is going out of control to the upside.” Yellen’s comments have intensified speculation of tighter monetary policy among traders who have been betting that Trump’s vows to boost fiscal spending will increase inflation. Odds for the Fed to act next month are now at 96 per cent, from about 80 per cent before the election. A report on leading economic indicators due later today will also offer clues on the strength of the recovery.
Among stocks moving on Friday, Salesforce.com Inc. surged the most in a month after the company gave an upbeat forecast for fourth-quarter sales. Ross Stores Inc. jumped to a 52-week high after profit topped estimates. Gap Inc. tumbled 9.4 per cent as results disappointed.
