Dow, S&P 500 fall as dollar rises, yield curve flat
By Sinéad Carew NEW YORK (Reuters) - U.S. stocks closed lower after choppy trade on Monday, as some investors showed signs of earnings season nerves, while political worries in Europe led the dollar to strengthen against the euro and sterling.
By Sinéad Carew
NEW YORK (Reuters) - U.S. stocks closed lower after choppy trade on Monday, as some investors showed signs of earnings season nerves, while political worries in Europe led the dollar to strengthen against the euro and sterling.
The euro continued its slide on uncertainty over Italy's budget and the British pound fell on news that Brexit negotiations with the European Union over Northern Ireland remained in deadlock.
The U.S. Treasury yield curve was the flattest in more than two weeks, while two-year note yields hit their highest level in a decade. Gains in longer-dated notes were limited due to worries about rising inflation pressures and further U.S. Federal Reserve rate hikes.
Fixed income trading appeared to weigh on U.S financial companies, making the sector the biggest drag on the S&P 500. A flat yield curve tends to hurt bank profits.
The third-quarter earnings season and U.S. midterm elections were also dampening equity investor enthusiasm, along with the rising dollar, according to money managers.
"We've seen decent results but not universally and there are some negative issues companies have talked about," said Tim Ghriskey, Chief Investment Strategist at Inverness Counsel in New York.
Investors should expect more volatility at least until U.S. congressional elections on Nov. 6, Ghriskey said.
"People are looking at the negatives and saying that it's a situation where there are more headwinds. At least until the midterms, it's going to be difficult to make any significant progress on the upside. The drift will be lower," said Alan Lancz, president, Alan B. Lancz & Associates Inc., an investment advisory firm in Toledo, Ohio.
The Dow Jones Industrial Average fell 126.93 points, or 0.5 percent, to 25,317.41, the S&P 500 lost 11.9 points, or 0.43 percent, to 2,755.88 and the Nasdaq Composite added 19.60 points, or 0.26 percent, to 7,468.63.
Investors looked ahead to the peak week for the U.S. earnings season, with Amazon, Alphabet, Microsoft and Caterpillar among the companies reporting.
Helped by a strong economy and deep corporate tax cuts, S&P 500 earnings per share are expected to grow 22 percent in the third quarter, according to Refinitiv estimates.
The dollar index rose 0.32 percent, with the euro down 0.41 percent to $1.1466. [USD/]
Sterling, meanwhile, was down 0.8 percent against the dollar. British Prime Minister Theresa May said the majority of Britain's deal to exit the EU has been agreed upon but repeated her opposition to an EU proposal regarding the Irish border.
Benchmark 10-year notes last rose 1/32 in price to yield 3.1978 percent, from 3.202 percent late on Friday.
U.S. crude rose 0.42 percent to $69.57 per barrel and Brent was last at $80.11, up 0.41 percent on the day. [O/R]
Spot gold dropped 0.3 percent to $1,221.97 an ounce.
After rising as much as 0.7 percent during the European session, stocks there ended lower as relief over Moody's decision to keep Italy's sovereign rating outlook stable was short-lived and the focus turned to Europe's response to Rome's budget plans. [.EU]
In China, Shanghai blue chips had gained 4.3 percent in their biggest one-day gain since November 2015, after Beijing promised stimulus support for stock markets in the world's second-largest economy.
Graphic - Asia-Pacific valuations: https://tmsnrt.rs/2Dr2BQA
Graphic - MSCI, Shanghai Indexes: https://tmsnrt.rs/2OGOOuu
(Additional reporting by Caroline Valetkevitch, April Joyner, Kate Duguid, Karen Brettell in New York, Karin Strohecker, Tom Wilson, Abhinav Ramnarayan in London and Wayne Cole in Sydney; Editing by Dan Grebler and Rosalba O'Brien)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.