Most U.S. stocks slipped Friday after a post-election rally took benchmark gauges to record levels on speculation that interest rates will rise amid expectations for brisker economic growth.
The S&P 500 Index fell 0.2 percent to 2,182 at 4 p.m. in New York, after climbing within two points of its Aug. 15 record of 2,190.15. The gauge rose 0.8 percent in the week. The Dow Jones Industrial Average pared its weekly gain to 0.1 percent, while the Russell 2000 Index added to its all-time high, capping an 11-day rally that’s the longest in 13 years. The Nasdaq Composite Index rose to its first all-time high since September before ending lower.
Speculation that Donald Trump’s administration will carry out fiscal stimulus has lifted industries perceived to benefit from economic growth, with banks and small caps leading gains. Federal Reserve Chair Janet Yellen said yesterday the central bank is close to boosting rates, aiding a rally in the dollar that’s left it at the highest level since February. The greenback’s strength has weighed on companies that generate sales overseas.
“The markets are looking at the potential of a Trump stimulus,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “They’re thinking the U.S. is going to do well, but the problem is that the dollar is going out of control to the upside.”
Yellen’s comments have intensified speculation of tighter monetary policy among traders who have been betting that Trump’s vows to boost fiscal spending will increase inflation. Odds for the Fed to act next month are now at 96 percent, from about 80 percent before the election. A report on leading economic indicators due later today will also offer clues on the strength of the recovery.
Among stocks moving Friday, Salesforce.com Inc. surged the most since August after the company gave an upbeat forecast for fourth-quarter sales. Ross Stores Inc. jumped to an all-time high after profit topped estimates. Gap Inc. tumbled 16 percent as results disappointed.