Dollar climbs as stocks recover

Most U.S. stocks closed higher after swinging between gains and losses while investors mulled the implications of rising U.S. bond yields and disappointing earnings. The dollar resumed its rally, climbing to the highest in three months.

“We’re going to have to continue this back and forth because the question is going to be throughout the year whether or not and at what level are rates too high for the economy,” Brent Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co., said in an interview at Bloomberg’s New York headquarters.

Tech weakness sent the Nasdaq Composite to its fifth straight loss, the longest slide since 2016. Disappointing earnings weighed on some of the biggest names in tech, with Twitter dropping more than 4 percent as analysts questioned its pace of growth. The greenback strengthened against almost every major peer, with the euro among the losers a day before the European Central Bank’s next rate decision.

Upward momentum in the dollar looks set to force a rethink on many of the most popular trades just now, giving equity investors yet another factor to grapple with after rising yields and threats to global trade roiled markets. They had been looking to earnings for some cheer, but even good earnings results have failed to inspire a pick up in equities, causing worries over peak growth to materialize.

“The sharp sell-off in rates has hijacked market sentiment,” Mark McCormick, the North American head of foreign-exchange strategy at Toronto-Dominion Bank, wrote in a note to clients. “The 3 percent level on the U.S. 10-year does not have any magical properties, but market participants are trying to navigate a global markets regime shift with a toolkit of mostly unstable correlations.”

Wednesday’s moves weren’t entirely risk-off, however, and established safe-haven assets including gold and the yen retreated.

Elsewhere, most industrial metals declined. Emerging-market currencies mostly weakened, led by South Africa’s rand. Turkey’s lira reversed a gain even as the central bank raised one of its lending rates.