U.S. stocks inch higher, dollar rebounds as rate cut fever wanes

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NEW YORK,- U.S. stocks were slightly higher and the dollar rebounded on Friday as market participants caught their breath as they approached the end of a week loaded with central bank policy decisions and crucial economic data.

The dollar bounced back, but remained on track for its largest weekly decline in five months.

Euphoria over the U.S. Federal Reserve’s dovish pivot was dampened a bit after New York Federal Reserve President John Williams pushed back against rate cut expectations, reiterating that the central bank remains focused on bringing inflation down to its 2% target.

The S&P 500 was modestly higher while the blue-chip Dow was essentially unchanged. Interest rate-sensitive tech- and tech-adjacent momentum stocks boosted the Nasdaq into positive territory.

All three are on course to register their seventh consecutive weekly gains, which would mark the S&P 500’s longest streak of weekly gains since September 2017.

“Markets have rallied very sharply since the beginning of November, and today’s comments from John Williams were effectively saying ‘calm down people,’ we’re not talking about lowering rates anytime soon,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “But while Williams threw a little cold water on the excitement, the base case for the current rally going into the earnings season is justified.”

Economic data released on Friday signaled an uptick in U.S. business activity but also showed the manufacturing sector continues to struggle.

The Dow Jones Industrial Average rose 13.42 points, or 0.04%, to 37,261.77, the S&P 500 gained 5.37 points, or 0.11%, to 4,724.92 and the Nasdaq Composite added 83.55 points, or 0.57%, to 14,845.11.

European shares reversed earlier gains, following their U.S. counterparts lower on waning Fed fervor over the possibility of looming interest rate cuts.

The pan-European STOXX 600 index rose 0.10% and MSCI’s gauge of stocks across the globe gained 0.12%.

Emerging market stocks rose 0.80%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.15% higher, while Japan’s Nikkei rose 0.87%.

U.S. Treasury yields edged lower after the Fed’s Williams reined in the rate cut fervor.

Benchmark 10-year notes last rose 6/32 in price to yield 3.9092%, from 3.93% late on Thursday.

The 30-year bond last rose 22/32 in price to yield 4.0171%, from 4.054% late on Thursday.

The dollar rebounded against a basket of world currencies, but remained on course for its biggest weekly drop in a month after a dovish Fed contrasted with the tougher line taken by its European counterparts boosted the euro and the pound.

The dollar index (.DXY) rose 0.49%, with the euro down 0.7% to $1.0914.

The Japanese yen strengthened 0.13% versus the greenback at 141.70 per dollar, while sterling was last trading at $1.2699, down 0.52% on the day.

Oil prices backed down from the previous session’s sharp gains.

U.S. crude fell 0.54% to $71.19 per barrel and Brent was last at $76.09, down 0.68% on the day.

Gold dipped in opposition to the greenback’s rebound but remained on track for a weekly gain.

Spot gold % to $2,035.39 an ounce.