August 21, 2014
Dollar, stocks advance after strong US GDP
The dollar strengthened and global equity markets rebounded after data showed the US economy grew strongly in the last quarter of 2013, a rate that suggests solid corporate earnings and continued solid growth into the new year.
Turmoil in emerging markets eased, as the hard-hit Turkish lira and South African rand rebounded. Russia's central bank pledged unlimited foreign exchange interventions if the ruble strays outside its target band.
The ruble hit record lows against the euro early in the session, while the rand slid to multi-year troughs before rebounding. Moves earlier in the week by Turkey, South Africa and India to staunch capital flight had failed.
On Wall Street, the Dow Jones industrial average rose 109.82 points, or 0.7 percent, to 15,848.61. The S&P 500 gained 19.99 points, or 1.13 percent, to 1,794.19, and the Nasdaq Composite added 71.691 points, or 1.77 percent, to 4,123.125.
The S&P 500 scored its biggest gain in more than a month, and the Nasdaq composite index gained more than 2 percent at one point, helped by strong quarterly revenue growth at Facebook Inc.
Facebook shares rose 14.1 percent to finish at a record closing high of $61.08.
The dollar was up 0.7 percent against a basket of six major currencies, at 81.069, and the appeal of the greenback revived against the safe-haven yen and Swiss franc.
The euro fell 0.81 percent against the dollar at $1.3552, while against the yen the greenback was up 0.38 percent at 102.67 yen.
A measure of global equity markets, MSCI's all-country world index, rebounded, rising 0.19 percent. MSCI's emerging markets index, however, was slightly lower, down 0.22 percent.
In Europe the pan-regional FTSEurofirst 300 index of leading companies closed up 0.3 percent at 1,294.26.
Gold fell more than 2 percent, on track for its biggest one-day drop in more than a month, as the US GDP data and the Fed's decision to keep trimming its stimulus boosted the dollar and led traders to cash in gains in the metal.
US COMEX gold futures for February delivery settled down $20 an ounce at $1,242.20.
Brent oil rose to just over $108 per barrel, and US crude reached its highest level in a month on bitter cold weather in the United States, which has boosted heating oil demand.
Brent crude rose 10 cents to settle at $107.95 a barrel. US crude settled up 87 cents at $98.23.
The US bond market retreated following Wednesday's rally, but some of the money leaving equities found its way into the developed world's government bond market.
German Bund futures rose 33 ticks to settle at 143.23, while German 10-year yields fell to their lowest level in nearly six months before ending at 1.712 percent.
Benchmark 10-year Treasury notes were last down 5/32 in price to yield 2.6949 percent.