U.S. stocks fell after the longest rally in three years, Treasuries rose for the first time in six days and the dollar weakened as the torrid advance in riskier assets eased.
American equity benchmarks fell from all-time highs as investors took stock after a weeklong rekindling of Trump trades amid optimism that the economy can withstand higher interest rates. Data Thursday did little to alter that view, with housing starts topping estimates. Still, bonds advanced with gold and European shares slid for the first time in eight days. The dollar weakened.
“Following the sharp rally we’ve seen in cyclical shares since early November, investors are now getting reluctant to just buy whole sectors, and are starting to pick the best stocks within the sectors,” Stephane Ekolo, chief European strategist at Market Securities in London.
President Donald Trump’s comment last week that his administration would soon unveil a “phenomenal” tax policy spurred a rally in everything from stocks to the dollar and emerging assets. Signs the rally has gone too far too fast emerged, with the relative strength index of the MSCI’s broadest global equity gauge signaling to some traders a correction is now due, while odds for a U.S. rate hike in March are on the rise.
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