US close: Dow, S&P notch record closes but stocks end off highs as dollar firms

The Dow and S&P 500 notched record closes on Thursday, underpinned by solid earnings releases, but stocks ended off their highs as comments from President Trump helped to breathe some life back into the dollar.

The Dow Jones Industrial Average rose 0.5% to 26,392.79 and the S&P 500 closed up 0.1% at 2,839.25, but the Nasdaq fell 0.1% to 7,411.16.

The dollar was 0.1% firmer versus the euro at the close of US markets and 0.7% higher against the pound after Trump said in an interview at the World Economic Forum in Davos that he expects the greenback to get “stronger and stronger”, adding: "Our country is becoming so economically strong again and strong in other ways, too."

These comments helped to reverse the slide sparked by US Treasury Secretary Steven Mnuchin’s comments on Wednesday, when he said at Davos that a weaker dollar is good for trade.

Investors were also mulling the latest policy announcement from the European Central Bank, which left interest rates and its forward guidance unchanged, pledging to keep its asset purchases running until inflationary pressures pick up.

The ECB made no change in terms of language or guidance, holding back from recent indications that it was preparing to tweak up the pace of policy tightening after the euro's recent surge to a three-year high.

The key refinancing rate was left unchanged at 0.00%, as economists expected, as were the deposit facility rate, marginal lending facility rate and asset purchase target at -0.4%, 0.25% and €30bn respectively.

Remarks by ECB chief Mario Draghi had pushed the euro past $1.25 earlier in the day as he pointed to growing confidence that inflation will reach its 2% target and appeared more relaxed about the currency’s recent appreciation than many market participants expected.

In corporate news, defence group Northrop Grumman rose after it posted better-than-expected quarterly sales and lifted its dividend, while Biogen gained after its fourth-quarter revenues and guidance for 2018 surpassed expectations.

Kroger rallied following reports that it and Chinese e-commerce company Alibaba have had early talks about working together, while Post-it maker 3M racked up healthy gains as investors welcomed better-than-expected fourth-quarter numbers and an upbeat outlook for this year.

Mining company Freeport McMoran rose after a fourth-quarter earnings beat, while Celgene ended up after the biopharmaceutical group’s fourth-quarter profit surpassed forecasts.

On the downside, Southwest Airlines flew lower despite its fourth-quarter profit coming ahead of forecasts, while Union Pacific retreated after its fourth-quarter earnings per share came in just shy of expectations.

Caterpillar fell back despite the heavy duty equipment maker’s quarterly profit beating forecasts again and Newell Brands tumbled as the consumer goods group said it’s exploring some strategic options that could cut its customer base by half.

Figures out earlier from the Labor Department showed the number of Americans filing for unemployment benefits rose last week.

US initial jobless claims increased by 17,000 from the previous week’s revised average to 233,000 versus economists’ expectations for an increase to 240,000 .The previous week’s average was revised down by 4,000 to 216,000.

Meanwhile, the four-week moving average fell by 3,500 from the previous week’s average, which was revised down by 1,000 from by 244,500.

Elsewhere, figures from the Commerce Department showed that US new home sales fell in December compared to the previous month.

Purchases of newly built single-family homes fell by 9.3% to a seasonally-adjusted annual rate of 625,000, below the 679,000 expected.