In New York and London on January 17th, MSCI's global equities index rose, while U.S. Treasury yields and the dollar strengthened, buoyed by positive economic data and earnings leading up to the U.S. presidential inauguration.
The U.S. dollar rebounded against major currencies after a four-day decline, and U.S. Treasury yields, which had dipped for three sessions, hit a two-week low before rebounding.
Recent Federal Reserve data indicated a 0.6% increase in production last month, following a 0.4% uptick in November. Data also revealed a rise in U.S. single-family homebuilding at year-end, although concerns over rising mortgage rates and excess housing inventory could hinder recovery.
Wall Street's main indexes saw gains for the day, with the S&P 500 and Dow on track for their most significant weekly increase since the U.S. presidential election week.
Analysts, including Phil Orlando, Chief Equity Strategist at Federated Hermes, noted the market's positive response to the recent economic indicators, suggesting that a bounce was expected due to overselling.
Comments from Fed Governor Christopher suggesting possible future rate cuts further supported stocks this week. However, concerns loomed over potential market volatility post-inauguration as policies are expected to change with the transition of power.
Market strategist Anthony Saglimbene highlighted improved investor confidence driven by economic data and strong bank earnings but expressed caution about potential volatility and the need for clarity on policies beyond the inauguration.
By mid-afternoon, the Dow Jones Industrial Average climbed 371.84 points, the S&P 500 rose 66.28 points, and the Nasdaq Composite gained 318.89 points.
Globally, MSCI's stock index increased, while Europe's STOXX 600 index closed up for a notable weekly gain – the most significant since early December.
In the bond market, yields bounced back after reaching a two-week low earlier, as strong economic data raised expectations that the Federal Reserve may not cut interest rates as much as previously anticipated.
The dollar index strengthened, but remained on course for a weekly decline as investors awaited clarity on the new administration's policies with President Trump's upcoming inauguration.
In commodities, oil prices dipped for the day amid U.S. sanctions on Russia, while gold prices fluctuated but were on track for a weekly gain amid uncertainties surrounding future U.S. policies and expectations of further interest rate cuts.