Wait for it ... Dow loses steam, doesn't make 20,000
Stocks rose Thursday but cut earlier gains as another run towards Dow 20,00 fell short.
Investors appear to be adjusting to the idea of more Federal Reserve rate hikes in 2017 than previously expected as stocks recouped losses from Wednesday's session that saw the Dow snap a seven-day winning streak.
On Wednesday, the Dow Jones industrial average fell 119 points after Fed policymakers rose a key interest rate a quarter-point for only the second time since 2006 and forecast slightly faster increases in the next few years.
But stocks recovered some Thursday as the Dow ended up about 60 points, 0.3%, to 19,852.24. The Dow was off earlier highs that saw the blue-chip rise as high as 19,951.29. The Standard & Poor's 500 index and the Nasdaq composite added 0.4% each.
Finally! Fed hikes rates for first time in 2016, forecast 3 more in 2017
Oil prices dropped 14 cents to $50.90 a barrel on the New York Mercantile Exchange.
The dollar surged to a 14-year high against the euro Thursday. The U.S. currency has been rising across the board in the wake of the Fed’s statement on Wednesday. That Fed move means potential returns on dollar holdings will be even higher. As a result, the euro fell to a low of $1.0395. That’s the first time it’s fallen below $1.04 since early 2003 when the U.S. was readying for an invasion of Iraq.
“What is more important, though, is that despite the Fed signaling a desire to raise interest rates at a faster pace, there was no panic in the markets, which shows the level of confidence investors have in the economy to handle it,” said Craig Erlam, senior market analyst at OANDA. “Rate hikes are finally seen as a positive once again rather than something that’s going to kill any rallies.”
That lack of panic was evident in stock markets. In Europe, Britain’s FTSE 100 climbed 0.7% while Germany’s DAX rose 1.1%. The CAC-40 in France was 1.1% higher.
Japan’s Nikkei 225 index dipped and then recovered lost ground, gaining 0.1%. Hong Kong’s Hang Seng fell 1.8% and South Korea’s Kospi was flat. The Shanghai Composite index fell 0.7%.