# Stocks, dollar gain on resilient U.S. economy
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-01-26
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: Strong US Economy Boosts Global Stocks and Dollar
Meta Description: A gauge of global stock performance rose as US economy shows strength with slowing inflation, boosting dollar. Fed may engineer a soft landing.
URL: https://financedigest.com/stocks-dollar-gain-on-resilient-u-s-economyhtml

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By Herbert Lash and Huw Jones

NEW YORK/LONDON (Reuters) – A gauge of global stock performance rose and the dollar strengthened on Thursday after a slew of data showed a strong U.S. economy that is decelerating with slowing inflation, suggesting the Federal Reserve can engineer a [soft landing](https://www.financedigest.com/stocks-dollar-gain-on-soft-landing-hopes.html "Stocks, dollar gain on soft landing hopes").

Gross domestic product increased at a 2.9% annualized rate in the fourth [quarter of 2022 as consumers boosted spending](https://www.financedigest.com/brits-spend-less-than-a-quarter-of-their-holiday-exploring-the-destination.html "Brits spend less than a quarter of their holiday exploring the destination") on goods, the Commerce Department said. But momentum rapidly slowed [toward the year’s end](https://www.financedigest.com/boe-raises-rates-again-as-investors-look-towards-end-of-hikes.html "BoE raises rates again as investors look towards end of hikes"), as rising interest rates eroded demand.

[Growth in personal consumption expenditures slowed to 2.1% on an annualised basis from 2.3% in the prior quarter and the GDP price](https://www.financedigest.com/liverpool-shines-as-one-of-uks-leading-ladies-for-house-price-growth.html "Liverpool shines as one of UK’s leading ladies for house price growth") index, another inflation measure, decelerated to 3.5%.

MSCI’s all-country world index, a gauge of stocks in 47 countries, was up 0.18% after paring gains after [hitting a fresh five-month](https://www.financedigest.com/sterling-hits-five-month-high-against-euro-before-boe-decision.html "Sterling hits five-month high against euro before BoE decision") high. The dollar index rose 0.512%.

The largely better-than-expected [data can help the weakening dollar](https://www.financedigest.com/dollar-skids-after-soft-u-s-economic-data-impact-of-opec-cuts-fades.html "Dollar skids after soft U.S. economic data; impact of OPEC+ cuts fades") find a near-term floor, said Joe Manimbo, senior market analyst at Convera in Washington.

On balance, the data being better than [expected suggests there’s more resilience in the economy](https://www.financedigest.com/german-economy-expected-to-skirt-recession-economy-ministry-report.html "German economy expected to skirt recession – economy ministry report") than many have given it credit,” he said. The fact that inflation figures in the Q4 [data moderated suggests](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") it’s a goldilocks scenario.

Treasury yields rose as a resilient economy strengthened the case for the Fed to maintain its hawkish stance in [coming months as it seeks to cool inflation with interest rates that officials have projected would stay above 5% into next](https://www.financedigest.com/whats-coming-next-in-the-clearing-and-settlement-world.html "What’s coming next in the clearing and settlement world?") year.

The yield on 10-year [Treasury](https://www.financedigest.com/wall-st-flutters-treasury-yields-ease-as-powell-resumes-testimony.html "Wall St flutters, Treasury yields ease as Powell resumes testimony") notes was up 3.8 basis points to 3.500% and the gap between yields on three-month Treasury bills and 10-year notes, seen as a recession harbinger, narrowed to -117.6 basis points.

“The net of all the releases, you have an economy that is decelerating, it’s not falling off a cliff,” said Steven Ricchiuto, U.S. [chief economist at Mizuho Securities USA LLC in New York](https://www.financedigest.com/former-sec-enforcement-chief-and-deutsche-bank-general-counsel-richard-h-walker-joins-king-spalding-in-new-york.html "Former SEC Enforcement Chief and Deutsche Bank General Counsel Richard H. Walker Joins King & Spalding in New York").

It’s not falling quickly enough from an above-trend growth [rate over the last three quarters to create](https://www.financedigest.com/italy-jan-jobless-rate-edges-up-to-7-9-with-35000-jobs-created.html "Italy Jan jobless rate edges up to 7.9%, with 35,000 jobs created") any slack in the labor market,” he said.

The Dow Jones Industrial Average fell 0.18%, the S&P 500 gained 0.11% and the Nasdaq Composite added 0.48%. In Europe, the broad STOXX 600 index rose 0.50%.

What the market is really looking for is what the Fed will say next week in terms of how many hikes they have in mind,” said Laureline Renaud-Chatelain, fixed-income strategist at Pictet [Wealth Management](https://www.financedigest.com/wealth-management-consultant.html "Wealth management consultant"), who expects a 25 basis point hike at next week’s Fed meeting.

Markets are expecting [rate cuts later this year and while there is momentum in stocks](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up"), the unfolding fourth-quarter results season is disappointing in parts, leading to corrections in earnings expectations, Renaud-Chatelain said.

Overnight in Asia, equities rose to a seven-month high, with [Hong Kong](https://www.financedigest.com/screening-of-winnie-the-pooh-horror-film-cancelled-in-hong-kong.html "Screening of ‘Winnie the Pooh’ horror film cancelled in Hong Kong") shares playing catch-up to other markets’ gains as trade resumed after a three-day Lunar New Year holiday.

MSCI’s broadest index of Asia-Pacific [shares outside Japan climbed 1.1% and was set for its fifth-straight day of gains](https://www.financedigest.com/european-shares-set-for-weekly-gain-on-u-s-inflation-outlook.html "European shares set for weekly gain on U.S. inflation outlook").

Oil [prices rose more than 1% on Thursday on expectations demand will strengthen as top](https://www.financedigest.com/4-for-the-price-of-1-what-you-can-buy-in-the-uks-top-northern-cities-for-the-price-of-a-london-pad.html "4 for the price of 1: What you can buy in the UK’s top northern cities for the price of a London pad") oil importer China reopens its economy and on positive U.S. [economic data](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar").

U.S. crude recently rose 1.22% to $81.13 per barrel and Brent was at $87.15, up 1.2% on the day.

Gold edged down after the strong U.S. data. Indications of a likely slowdown limited losses in the safe-haven asset.

Spot gold dropped 1.1% to $1,925.56 an ounce.

(Reporting by Herbert Lash, additional reporting by Huw Jones in London, Ankur Banerjee; editing by Kim Coghill, Nick Macfie, Elaine Hardcastle and Sharon Singleton)


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