U.S. Stocks, Dollar Rebound From Steep Selloff

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05/18/2017 | 09:14 pm

By Akane Otani and Riva Gold
-- S&P 500 gains 0.7%

-- Stoxx Europe 600 slides 0.5%, Nikkei off 1.3%

-- WSJ Dollar Index rises 0.5%

U.S. stocks and the dollar jumped Thursday as investors piled into shares of financial and technology companies.

Stock gains accelerated in the afternoon, sending the Dow Jones Industrial Average up more than 100 points. All 11 S&P 500 sectors were higher, led by rebounds in financial and technology stocks, which were among the biggest decliners in Wednesday's selloff.

The Dow industrials rose 138 points, or 0.7%, to 20745. The S&P 500 added 0.7%, and the Nasdaq Composite rose 1%.

The WSJ Dollar Index, which measures the dollar against a basket of 16 currencies, added 0.5% after logging its worst session since March.

Several traders said they couldn't point to any specific news behind the moves, which intensified in afternoon trade. Some said buyers were likely stepping in to take advantage of Wednesday's selloff, which sent the Dow industrials on its steepest one-day decline since September.

"A one-day move didn't cause any panic," said Mohit Bajaj, director of ETF trading solutions at brokerage WallachBeth Capital.

Turmoil in Washington has put the Trump administration on the defensive and renewed concerns among some investors that the White House may struggle to push through proposals on tax cuts, deregulation and infrastructure spending. Bets on such policy changes had helped stocks and the U.S. dollar climb after Election Day while sending government bonds lower.

Still, many say that longer term, jitters in Washington are unlikely to derail the stock rally. A buoyant global economy and solid corporate earnings should help major indexes keep climbing, investors and analysts say.

Data Thursday showed the number of Americans applying for first-time unemployment benefits fell last week for the third consecutive time in a fresh sign of steady job creation.

"I still continue to go back to the economy when I'm talking to clients. As long as the U.S. economy remains in a good foundation...that creates a supportive environment for equities," said Shannon Saccocia, head of asset allocation and portfolio strategy at Boston Private Wealth.

Shares of technology and financial companies, among the biggest decliners on Wednesday, bounced back Thursday. Apple shares climbed 1.7%, among the best performers in the Dow industrials.

The blue-chip index received another boost from gains in shares of Wal-Mart, which rose 3.2% after posting its 11th straight quarterly increase in same-store sales.

Financial stocks in the S&P 500 rose with yields, posting a 0.9% gain.

The yield on the 10-year U.S. Treasury note climbed to 2.231%, according to Tradeweb, from 2.216% on Wednesday. Yields rise as bond prices fall.

Some investors remain cautious, saying further signs of dissension in Washington could put pressure on stocks, especially if they suggest a delay in tax cuts, which many hope will boost corporate earnings.

"Two weeks ago, we were talking about policy, and now we're talking about all of the political firestorm swirling around the White House," said Brett Wander, chief investment officer for fixed income at Charles Schwab Investment Management.

Elsewhere, the Stoxx Europe 600 fell 0.5% amid declines in the shares of banks, miners and auto companies.

Earlier, Japan's Nikkei Stock Average fell 1.3% as the yen rose, weighing on the shares of exporters. Declines in Japanese shares came despite economic data that showed first-quarter gross domestic product expanded 2.2% from a year earlier.

Write to Akane Otani at [email protected] and Riva Gold at [email protected]

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