Global stocks fell on Thursday as early gains fizzled, continuing the year-end downdraft into the first trading day of the new year, while the dollar hit a two-year high after economic data indicated the U.S. labor market remained on solid footing.
On Wall Street, U.S. stocks were broadly lower after initial gains, with the S&P 500 on track for its fifth straight daily decline, its longest skid since April.
The U.S. Labor Department reported that the number of Americans filing new applications for unemployment benefits dropped to an eight-month low of 211,000 last week, below the 222,000 estimate of economists polled by Reuters.
“The labor market has been incredibly resilient and we’ve seen that continue,” said Keith Buchanan, senior portfolio manager at GLOBALT Investments in Atlanta. “Overall, the labor market is really what’s fueled the consumer, which has held this economy together for the last three years of this fight we’ve had with inflation.”
Wall Street declines were led by the consumer discretionary sector (.SPLRCD), opens new tab, which was dragged lower by a roughly 6% fall in Tesla (TSLA.O), opens new tab after the electric vehicle maker reported its first decline in annual deliveries.
The Dow Jones Industrial Average (.DJI), opens new tab fell 269.84 points, or 0.63%, to 42,274.38, the S&P 500 (.SPX), opens new tab fell 34.79 points, or 0.59%, to 5,846.67, and the Nasdaq Composite (.IXIC), opens new tab fell 120.55 points, or 0.63%, to 19,188.71.
European stocks closed higher after a sluggish start to the session, buoyed by a jump in energy names (.SXEP), opens new tab.
MSCI’s gauge of stocks across the globe (.MIWD00000PUS), opens new tab lost 4.08 points, or 0.48%, to 837.34. Europe’s STOXX 600 (.STOXX), opens new tab index gained 0.6%.
The dollar jumped to a two-year high on Thursday, building on the strong gains from 2024 as expectations remained intact that economic growth in the U.S. will outpace that of its peers, keeping the Federal Reserve on a slower interest rate-cut path.
The dollar index , which measures the greenback against a basket of currencies including the yen and the euro, rose 0.77% to 109.37, after climbing to 109.54, its highest since Nov. 10, 2022.
“In terms of 2025 economic growth, there’s no rival to the dollar,” Adam Button, chief currency analyst at ForexLive in Toronto, said.
“Capital flows dominate the turn of the year and the U.S. stock market has really put to shame every other global market,” Button said. “The dollar is the only game in town until there is a genuine stumble in the U.S. economy.”
The euro was down 1.01% at $1.025 after slumping to $1.0223, its lowest level since Nov. 21, 2022.
Against the Japanese yen , the dollar strengthened 0.44% to 157.56. Sterling dropped 1.23% to $1.2363 and was on pace for its biggest daily percentage drop since Nov. 6.
Stocks had stumbled heading into the end of the year, denting a year-long rally fueled by growth expectations surrounding artificial intelligence, anticipated rate cuts from the Federal Reserve, and more recently, the likelihood of deregulation policies from the incoming Trump administration.
However, the recent economic forecast from the Fed, along with worries that President-elect Donald Trump’s policies such as tariffs may prove to be inflationary, has sent yields higher and created a stumbling block for equities.
The yield on benchmark U.S. 10-year notes edged down 0.6 basis point to 4.571%, but remained above the 4.5% mark that analysts see as a problematic level for stocks.
Oil prices advanced, with U.S. crude up 1.94% to $73.10 a barrel and Brent climbing to $75.88 per barrel, up 1.67%, on optimism over China’s economy and fuel demand after a pledge by President Xi Jinping to promote growth.
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