U.S. Stocks Edge Higher as Dollar Slides
July 20 2018 - 1:44PM
Dow Jones News
By Akane Otani and Ben St. Clair
U.S. stocks inched higher Friday, on course to end the week
little changed, as the dollar resumed its recent slide.
The Dow Jones Industrial Average rose 28 points, or 0.1%, to
25092. The S&P 500 was up less than 0.1% and the Nasdaq
Composite edged up 0.2%.
Major indexes struggled to break higher throughout the week as
investors parsed dozens of earnings reports and rebukes from
President Donald Trump on Federal Reserve policy sent the dollar
lower.
Mr. Trump on Twitter criticized China, the European Union and
other countries for "manipulating their currencies and interest
rates lower" and said the strengthening U.S. dollar was "taking
away our big competitive edge." The remarks echoed comments the
president made Thursday criticizing the Fed for raising interest
rates -- a departure from the convention presidents have followed
of not commenting on Fed policy.
The WSJ Dollar Index, which measures the dollar against a basket
of 16 currencies, was recently down 0.6%, while U.S. Treasurys
weakened, with the yield on the benchmark 10-year U.S. Treasury
note recently at 2.891%, versus 2.845% Thursday. Bond yields rise
as prices fall.
Meanwhile, industrial and agricultural heavyweights came under
pressure after Mr. Trump on Friday reiterated his threat to impose
tariffs on every dollar of China's roughly $500 billion in exports
to the U.S. Agricultural machinery maker Deere fell 1.6%, while
Caterpillar lost 1%.
Still, even as trade tensions have flared this year, analysts
and investors say upbeat earnings and economic data are helping
them remain cautiously optimistic. S&P 500 firms are on track
to report their second fastest pace of earnings growth since 2010
for the second quarter, according to FactSet, pointing to sustained
momentum in the U.S. even as growth elsewhere around the world has
faltered.
Microsoft jumped 2.5% after reporting Thursday that its annual
revenue topped $100 billion for the first time thanks to gains in
its cloud business, while Honeywell International rose 3.8% after
boosting its sales guidance.
"Even though we're the ones initiating this round of the trade
war, we're likely to suffer the least," said Brian Nick, chief
investment strategist at Nuveen. The stock market may not race
higher at the pace it did in January, but it now trades at
valuations that look more reasonable, Mr. Nick added.
Elsewhere, the Stoxx Europe 600 dropped 0.1%, pushed lower by
the autos and basic resources sectors, although it logged its third
consecutive weekly gain.
The Shanghai Composite Index rose Friday but posted its eighth
weekly decline in nine as Chinese yuan hit one-year lows against
the dollar following Mr. Trump's latest threats to impose tariffs
on China. Beijing guided its official exchange rate down by 0.9%
Friday, spurring its largest retreat in two years.
A weaker yuan makes Chinese exports less expensive for foreign
buyers, something that Mr. Trump has described as a form of
currency manipulation. But analysts say that the yuan's
depreciation has been spurred not just by trade fears but also by
signs of slowing growth in China.
On the trade front, "there's a whole flurry of statements being
made," but a lack of action for the most part, said Andrew
Milligan, head of global strategy at Aberdeen Standard
Investments.
"I think watch and wait is still the order of the day," he
added.
Write to Akane Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
July 20, 2018 13:29 ET (17:29 GMT)
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