The Rally on Wall Street Stalls - For Now

The Rally on Wall Street Stalls - For Now

Wall Street dipped today, weighed down by energy stocks as oil prices dropped and as banks shares fell for the first time in six days. Profit taking may have been another factor at play.

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US stocks fell after their longest rally in three years, Treasuries rose for the first time in six days and the dollar weakened as the torrid advance in riskier assets eased while investors wait for details on the Trump administration’s pro-growth policy promises and assess the timing of the Federal Reserve’s next rate increase.

The S&P 500 snapped its longest winning streak since 2013. Investors sold shares of financial companies, which had been among the best performers earlier in the week, while pushing government bonds and their stock-market proxies higher. 

The so-called "Trump rally" has seen the S&P 500 rise about 5 percent so far in 2017, with the Dow Jones Industrial Average up 4 percent. Now, with a strong fourth-quarter earnings season mostly complete, many investors say they need concrete signs of progress from Trump to justify more gains. The three main US indexes inched up enough at today's open to notch record intraday highs for the sixth straight session.

Fewer Americans than forecast filed last week applications for unemployment benefits, underscoring a vibrant labor market. Jobless claims rose by 5,000 to 239,000 in the week ended Feb. 11, a report from the Labor Department showed Thursday. Continuing claims fell slightly. The low number of applications mirrors a tight labor market in which demand for skilled and experienced workers is at a premium. Near historic lows, first-time claims have been below 300,000 for the longest period since 1970.

Builders started work on more US homes than forecast in January after an upward revision to starts in the prior month, a sign construction was on a steady path entering 2017. Residential starts totaled an annualized 1.25 million, easing from a 1.28 million pace in the prior month, a Commerce Department report showed Thursday. Permits, a proxy for future construction, increased at the fastest pace since November 2015 on a pickup in applications for apartment building.

The dollar weakened against a basket of major currencies on Thursday, posting its steepest one-day drop in over two weeks, due to lower US bond yields and uncertainty over the timing of the Federal Reserve's next interest rate increase. The greenback posted losses for a second day, retreating further from a one-month high set during a winning streak where it touched a five-week peak versus the euro and a 2-1/2 week high against the Japanese yen. Traders have scaled back bets on a looming US rate hike as they concluded Fed Chair Janet Yellen did not deliver enough conviction at her economic testimony before Congress on Wednesday on whether the Fed's next rate increase would come at its March 14-15 meeting.

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