Wall St dips as greenback rebounds

Trader James Dresch works on the floor of the New York Stock Exchange. File photo / AP

Wall Street fell overnight, while the US dollar regained its footing following Wednesday's tumble, as investors reposition in the wake of the Federal Reserve's latest comments on interest rates.

On Wednesday Fed policy makers indicated that interest rates would probably rise more gradually when increases begin as they moderated their outlook for US economic growth, though also predicted a stronger US jobs market ahead.

In afternoon trading on Wall Street, the Dow Jones Industrial Average fell 0.53 per cent, while the Standard & Poor's 500 Index slid 0.39 per cent. The Nasdaq Composite Index added 0.25 per cent.

The US dollar strengthened, gaining 2 per cent against the euro, bouncing back from the previous day's hectic selling.

Still, some predict the US currency's upward momentum will soon run out of steam now that the Fed has cut back its rate projections.

"The dollar rally is nearing its end," David Bloom, HSBC's global head of currency strategy, wrote in a report on Thursday, Bloomberg reported. "The dollar bull needs feeding and new factors challenge the consensus view that the dollar can extend in a sustained way."

The latest US economic data were mixed. The Labor Department said initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 291,000 for the week ended March 14.

Separately, the Philadelphia Fed said its business activity index fell to 5.0 in March, the lowest level since February of 2014, and down from 5.2 in February. The Conference Board said its index of leading indicators increased 0.2 per cent last month, while the Commerce Department said the current account gap widened increased to US$113.5 billion in the fourth quarter, from US$98.9 billion in the third quarter.

"First-quarter growth will be lacklustre due to the weather effects and other transitory issues. We do expect overall economic activity to rebound in the coming months and quarters," Sam Bullard, a senior economist at Wells Fargo Securities in Charlotte, North Carolina, told Reuters.

Declines in shares of Exxon Mobil, as well as those of Caterpillar, and Chevron, down 1.7 per cent, 1.6 per cent and 1.6 per cent respectively, led the Dow lower.

Oil declined, partly because the greenback strengthened.

"It's dollar play all over again," Phil Flynn, analyst at the Price Futures Group in Chicago, told Reuters. "The fact that the oil market is oversupplied is a given, so the only real variable now are currency moves and how they impact commodities demand."

Shares of Apple fell, last 0.5 per cent weaker, in their first day as part of the Dow.

In Europe, the Stoxx 600 Index ended the session with a 0.6 per cent increase from the previous close. France's CAC 40 Index added 0.1 per cent, while the UK's FTSE 100 Index rose 0.3 per cent to a fresh record close.

Germany's DAX slipped 0.2 per cent.

"There's no doubt that European stocks are a good place to be," William Hobbs, head of equity strategy at Barclays' wealth-management unit in London, told Bloomberg. "However, they have run very fast and very far. You've got some conflicting forces with regards to European stocks at the moment. The Greek negotiations are starting again and there's plenty of bad feeling between both sides."