Stocks mixed, dollar falls before elections, Fed

By Herbert Lash

NEW YORK (BestGrowthStock) – Global stocks rose despite Wall Street’s mixed finish and the dollar’s slide on Thursday as investors pulled back before expected upheaval from next week’s U.S. elections and the likelihood of more monetary easing.

Oil prices ended higher, supported by an unexpected drop in new U.S. jobless claims to a three-month low and a dollar that weakened over rising worries about the extent of a second round of stimulus by the U.S. Federal Reserve next week.

Trading in Tokyo was poised to open near break-even, with the December futures contract that trades in Chicago for the Nikkei 225 off 5 points at 9,350.

During Thursday’s trading, investors shied away from big bets ahead of the two-day Fed meeting that will end on this coming Wednesday.

The Federal Reserve Bank of New York has asked market participants about their expectations for further easing as part of its regular survey prior to Fed meetings, a person familiar with the survey said.

A Reuters poll of 17 primary dealers on Wednesday showed forecasts on the size of a renewed Fed program ranging widely between $250 billion and $2 trillion, with most expecting purchases of between $80 billion and $100 billion a month.

The drop in claims for new unemployment benefits gave U.S. equities an early gain as did a weak dollar, but the inverse relationship between the U.S. currency and stocks appeared to break down. Mixed earnings also added to the choppy action.

STALLING FOR TIME

Next week could bring significant shifts in both monetary policy and legislative direction, leading investors to largely disregard earnings news and economic reports.

“Perhaps this is going to be a ‘buy the rumor, sell the news’ kind of deal where we have had the rally in anticipation of all these things,” said Phil Orlando, chief equity market strategist, at Federated Investors in New York.

“Now that we are about to cross the threshold, maybe we are getting a little toppy here and we need to consolidate some of those gains.”

The Dow Jones industrial average (.DJI: ) slipped 12.33 points, or 0.11 percent, to end at 11,113.95. The Standard & Poor’s 500 Index (.SPX: ) edged up 1.33 points, or 0.11 percent, to 1,183.78. The Nasdaq Composite Index (.IXIC: ) rose 4.11 points, or 0.16 percent, to close at 2,507.37.

European shares ended higher on upbeat earnings results, helping lift MSCI’s all-country world equity index (.MIWD00000PUS: ) 0.6 percent.

The MSCI index of Asia Pacific stocks outside Japan rose 0.7 percent (.MIAPJ0000PUS: ) after a nearly 2 percent slide the day before. Japan’s Nikkei stock average (.N225: ), which was spared the sell-off, dipped 0.2 percent to end at 9,366.03, a six-week low.

The euro gained 1.15 percent at $1.3926 as the dollar slipped. A recent move to trim extreme short dollar positions amid speculation the Fed will announce plans to buy more assets next week, also slowed.

The dollar tumbled against a basket of major currencies, with the U.S. Dollar Index (.DXY: ) down 1.10 percent at 77.290.

Against the Japanese yen, the dollar dropped 0.86 percent to 80.99.

FLOCKING TO GOLD AND BONDS

Gold closed higher as the dollar slid.

Gold futures for December delivery climbed $19.90, or 1.5 percent, to $1,342.50 an ounce on the COMEX division of the NYMEX.

Crude oil rose in a seesaw session. U.S. crude for December delivery rose 24 cents to settle at $82.18 a barrel, after dropping earlier to $81.50. It has gained in four of the last five sessions.

ICE December Brent crude added 43 cents to end at $83.59.

“The market looks somewhat directionless until the election and the Federal Reserve details next week are known,” said John Kilduff, partner at Again Capital LLC in New York.

A recent rise in yields and talk of aggressive quantitative easing by the Federal Reserve drove buyers to U.S. Treasuries and bolstered demand in an auction of seven-year Treasury notes.

Ten-year yields above 2.70 percent attracted buyers. The 10-year Treasury note rose 18/32 in price to yield 2.66 percent, down from 2.72 percent late on Wednesday.

(Reporting by Chuck Mikolajczak, Steven C. Johnson, Chris Reese, Gene Ramos and Carole Vaporean in New York; Writing by Herbert Lash; Editing by Jan Paschal)

Stocks mixed, dollar falls before elections, Fed