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(Bloomberg) -- U.S. stocks were mixed after retreating from all-time highs as several large companies offered earnings encouragement. Gold and oil dropped with Treasuries, and the dollar rose following its lowest close in three years amid Congressional talks to avert a government shutdown Friday.
The S&P 500 Index turned lower after an early surge that pushed it over 2,800 for the first time. The Dow Jones Industrial Average remained in positive territory but fell back after cracking 26,000 at the start of trading. The Nasdaq Composite Index, Nasdaq 100 Index and small-cap Russell 2000 Index all posted losses.
Equities initially rose on earnings enthusiasm. Citigroup posted healthy earnings and management discussed possible significant investor payouts from the bank’s windfall stemming from a major tax cut. General Motors surprised the market by predicting steady profits in 2018 and growth in 2019. And UnitedHealth raised its adjusted profit projection due to the recent tax overhaul.
The recent climb by U.S. stocks, spurred in part by synchronized global economic growth, has some investors wondering if there’s too much short-term froth in the market.
“This is going to be a philosophical question within the market, in terms of how much higher earnings growth from tax cuts is worth in terms of valuation, and how much is it worth just purely on a dollar per share earnings basis,” Jurrien Timmer, director of global macro at Fidelity Investments, said by phone. “I think that the market’s trying to figure that out, and on top of that you have the classic momentum story.”
The Stoxx Europe 600 Index climbed, tracking an advance in the MSCI Asia Pacific Index after Hong Kong stocks hit a record. Emerging-market stocks jumped, consolidating at the highest level in almost a decade. The euro came under pressure as prospects for a German coalition government were dealt an early blow, and on reports the European Central Bank will maintain a bond-buying pledge when it meets next week. That helped spur both core and periphery debt.
With worldwide equity gauges extending records on the back of strong global growth and in the wake of last week’s wobble across the bond market, investors are increasingly alert for potential threats to the risk-on mood. As earnings season picks up steam, corporate results are set to be the big focus in Europe ahead of central bank meetings in the U.S., Japan and Europe before the end of the month.
Meanwhile, the yen dropped following a five-day increase amid a warning from Japan’s finance minister about excessively rapid moves in the currency market. Sterling slipped on easing inflation. And bitcoin joined a slump in cryptocurrencies, tumbling 17 percent to below $12,000.
Terminal users can read more in our markets blog.
Here’s what to watch out for this week:
- Earnings season ramps up: Taiwan Semiconductor Manufacturing Co., ASML Holdings NV, Bank of America Corp. and Goldman Sachs Group Inc. are among some notable releases.
- Industrial production in the U.S. probably increased in December, a report may show Wednesday, completing a solid year for manufacturing.
- U.S. housing starts probably slipped in December for the first time in three months as frigid winter weather impeded work, forecasts show ahead of Thursday’s release.
- The Bank of Canada’s interest-rate decision comes Wednesday. Monetary policy announcements are also this week due in South Korea, South Africa and Turkey.
- China releases fourth quarter GDP, December industrial production and retail sales Thursday.
And these are the main moves in markets:
- The S&P 500 dipped 0.2 percent to 2,782.14 and the Dow was up 38 points, or 0.2 percent, to 25,841.36 as of 2:04 p.m. in New York.
- The Stoxx Europe 600 climbed 0.1 percent.
- The MSCI All-Country World Index gained 0.1 percent to an all-time high.
- The MSCI Emerging Market Index jumped 0.6 percent to a record.
- The Bloomberg Dollar Spot Index was down slightly, erasing its first advance in a week.
- The euro was little changed at $1.2268.
- The British pound was essentially unchanged at percent to $1.3796.
- The Japanese yen was flat at 110.54 per dollar, the first retreat in more than a week.
- The yield on 10-year Treasuries added less than one basis point to 2.5517 percent.
- Germany’s 10-year yield decreased three basis points to 0.562 percent.
- Britain’s 10-year yield fell two basis points to 1.303 percent.
- Gold slid 0.1 percent to $1,338.72 an ounce, the first decline in a week.
- West Texas Intermediate crude fell 0.6 percent to $63.94 a barrel, the first retreat in more than a week.
--With assistance from Cormac Mullen Samuel Potter and Sarah Ponczek
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