Wall St seesaws as greenback extends rally

Specialist Michael Pistillo, foreground, work with traders at his post on the floor of the New York Stock Exchange. File photo / AP

Wall Street seesawed overnight as the US dollar continued its climb amid bets the Federal Reserve is gearing up to lift interest rates as early as June.

"The reason the Fed would raise rates is because growth dynamics are picking up, which would ultimately be a tailwind for markets, though markets will likely challenge that view with volatility," Jeremy Zirin, chief equity strategist of wealth management at UBS in New York, told Reuters.

Fed policy makers begin their next two-day meeting on March 17.

In afternoon trading on Wall Street, the Dow Jones Industrial Average slipped 0.03 per cent. The Standard & Poor's 500 Index eked out a 0.08 per cent gain, while the Nasdaq Composite Index inched 0.01 per cent higher. Following Tuesday's drop, the Dow and the S&P 500 have given up their gains in 2015 so far.

Declines in shares of Wal-Mart and those of Cisco, down 1.3 per cent and 1.2 per cent respectively, offset gains in shares of Intel and those of Goldman Sachs, up 2.7 per cent and 1.2 per cent respectively.

In Europe, the Stoxx 600 Index finished the session with an 1.5 per cent advance from the previous close as the slide in the euro is bolstering the profit outlook for corporate exporters benefiting from the weak exchange rate.

The UK's FTSE 100 Index gained 0.3 per cent, while France's CAC 40 Index rallied 2.4 per cent, and Germany's DAX jumped 2.7 per cent to close at a record high.

"The most important thing that [quantitative easing] is doing is giving Europe a fantastically cheap currency," David Hussey, head of European equities at Manulife Asset Management in London, told Bloomberg. "The euro has absolutely collapsed. This is shifting growth and demand around the world - Europe is an export-led economic bloc and that's good news. Earnings growth will be really strong and the market will follow. Carmakers and chemical stocks are the obvious plays."

The euro slid 1 per cent to below US$1.06 for the first time in 12 years as the European Central Bank's quantitative easing program drove euro-zone yields to record lows.

"For many investors, parity is the next big psychological level, but it might take some time," Charles St. Arnaud, currency strategist at Nomura Securities International in New York, told Reuters.

German bunds rose, pushing yields on the 10-year note one basis point lower to 0.22 per cent, after earlier in the session falling as low as a record 0.198 per cent. Yields on German 30-year government bonds have declined below on US two-year notes.

ECB President Mario Draghi said its bond purchases will help stoke inflation and the economy.

"We can deploy and we will deploy monetary policy in a way that can and will stabilise inflation in line with our objective," Draghi told a conference in Frankfurt on Wednesday. "Our monetary policy is certainly supporting the recovery."