U.S. Stocks Surge and Dollar Strengthens Amid Strong Data Defying Central Banks' Cautious Stance

By Stephen Culp

NEW YORK () – U.S. stocks continued their upward trend, and the dollar gained strength due to robust data, enabling investors to overlook warnings from global central bankers about rising economic uncertainties and the unpredictable nature of tariffs imposed by U.S. President Donald Trump.

Data from the U.S. indicated that initial unemployment filings remained stable and existing home sales unexpectedly rose, aiding in alleviating concerns about the economy weakening, even though the U.S. Federal Reserve issued reduced economic forecasts on Wednesday.

Following the release of home sales figures, Wall Street shifted towards positivity. The strengthening of the dollar and an increase in oil prices also occurred as indications of robust demand outweighed the ongoing conflicts in the Middle East.

Immediately following the Federal Reserve’s choice to keep interest rates unchanged, the Bank of England (BoE) also decided to maintain its primary interest rate stable. However, it warned against expecting any imminent reductions in rates as it navigates various economic challenges and uncertainties.

The Swiss National Bank reduced its interest rate to almost zero and expressed growing concerns about the worldwide effects of Trump's trade policies. Meanwhile, Sweden’s central bank forecasted maintaining present interest levels for the foreseeable future and staying flexible in addressing shifts in the global economy.

"Trump's rhetoric and his actions have forced other countries to the bargaining table," says Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois. "But what are the implications? There's a ton of dust in the air right now."

"Generating significant unease... across global markets, and now it’s up to the banking sector to determine their response," Nolte said additionally.

On the contrary, Turkey's central bank raised its overnight borrowing rate to 46% temporarily following the devaluation of the lira due to the detention of President Tayyip Erdogan's primary political opponent.

The Dow Jones IndustrialAverage gained 216.53 points, or 0.52%, closing at 42,181.83. The S&P 500 added 21.77 points, or 0.38%, finishing at 5,697.06, while the NasdaqComposite climbed 87.69 points, or 0.50%, ending at 17,839.05.

European stocks moved into the red, largely due to the poor performance of banks, as investors considered the Bank of England's warning.

The Europe-wide FTSEurofirst 300 index dropped by 7.01 points, equivalent to a 0.32% decline.

MSCI's index of shares worldwide climbed 1.36 points, or 0.16%, to reach 846.73.

The pan-European STOXX 600 index dropped by 0.36%, whereas emerging market stocks decreased by 3.43 points, or 0.30%, settling at 1,139.86. The MSCI gauge for Asia-Pacific share indices excluding Japan ended lower by 0.2% at 592.74, with Japan’s Nikkei losing 93.54 points, or 0.25%, ending up at 37,751.88.

The US dollar strengthened following the Federal Reserve’s signal that it had no immediate plans to reduce its main interest rate. Meanwhile, the British pound stayed weak in response to the Bank of England’s choice to maintain its current stance.

The dollar index, which gauges the US currency relative to a mix of major global currencies like the yen and euro, climbed by 0.58% to reach 103.98 points, causing the euro to drop by 0.67%, trading at $1.0828 per euro.

Against the Japanese yen, the dollar gained 0.01% to reach 148.69.

In the world of cryptocurrencies, Bitcoin saw an increase of 0.45%, reaching $85,761.79. Conversely, Ethereum dropped by 1.95%, trading at $1,995.26.

The U.S. Treasury yields declined following remarks from Federal Reserve Chairman Jerome Powell, who suggested that the central bank is ready to take action should the economy experience a downturn.

The yield on the key U.S. 10-year Treasury notes dropped by 4.8 basis points to 4.208%, down from 4.256% late Wednesday. Meanwhile, the yield on the 30-year bond decreased by 4.9 basis points to 4.5175%, compared to 4.567% late Wednesday.

The 2-year note yield, usually aligning with interest rate projections for the Federal Reserve, dropped 2.8 basis points to 3.951%, down from 3.979% late Thursday.

Oil prices recovered from early declines after positive U.S. economic figures were released and as new conflicts erupted in the Middle East.

In the U.S., crude prices increased by 1.55%, reaching $68.20 per barrel, while Brent climbed to $71.84 a barrel, marking a daily gain of 1.5%.

Gold prices took a breather following the precious metal reaching record levels earlier in the trading session.

The price of spot gold decreased by 0.28% to reach $3,038.62 per ounce. In contrast, U.S. gold futures increased by 0.08%, settling at $3,038.20 an ounce.

(Reported by Stephen Culp; Additional reporting by Marc Jones from London; Edited by Joe Bavier)