US stocks rose on Tuesday after company earnings reports were better than expected, with the Dow Jones Industrial Average breaching the 23,000 mark for the first time, while the US Treasury yield curve flattened and the dollar rose to a one-week high on increased inflation expectations.
The Dow briefly touched a new high of 23,002.20, powered by earnings from UnitedHealth and Johnson & Johnson. The S&P 500 had been negative as traders were left unimpressed by some bank earnings, but it ticked up before the market closed.
Gains on world stock markets petered out near record-high levels, in part because a rally in commodities helped underpin one of the most durable bull runs in recent history.
Goldman Sachs Group Inc and rival Morgan Stanley topped analysts' expectations with their third-quarter earnings, but shares of Goldman fell because the results were fuelled by a volatile unit that has sharp revenue swings, analysts said.
The Dow Jones Industrial Average rose 40.48 points, or 0.18 per cent, to 22,997.44, the S&P 500 gained 1.72 points, or 0.07 per cent, to 2,559.36 and the Nasdaq Composite dropped 0.35 points, or 0.01 per cent, to 6,623.66.
European shares lost ground, with the FTSEurofirst 300 index dropping 0.17 per cent, though they were underpinned by solid earnings from food group Danone and education specialist Pearson and talk of a break-up of investment bank Credit Suisse.
MSCI's gauge of stocks across the globe shed 0.11 per cent.
Meanwhile, the yield spread between US 5-year and 30-year Treasuries fell to its lowest since November 2007, and 2-year yields rose to their highest in nearly nine years.
Spread compression between shorter- and longer-dated maturities was due to increased expectations for interest rate tightening by the Federal Reserve and minimal signs of a pick-up in long-term inflation.
Speculation that US President Donald Trump was leaning toward nominating Stanford University economist John Taylor to head the Federal Reserve helped drive the expectations for rates and inflation rises.
“Taylor is perceived as more hawkish than Ms.(Janet) Yellen so under his potential tutelage, the central bank might lift borrowing rates more aggressively, which would bolster the dollar's allure,” said Joe Manimbo, senior marker analyst at Western Union Business Solutions in Washington.
The increased expectations, also pushed by the strongest reading on US import prices in more than a year, helped lift the dollar.
The Labour Department said import prices jumped 0.7 per cent last month, the biggest gain since June 2016, after an unrevised 0.6 per cent rise in August.
A fourth day of gains for the dollar index, which hit a one-week high, was also supported by broad-based weakness for the euro and the pound.
Knocked by the stronger dollar, the euro slipped to a one-week low of $1.1734, having fallen almost 3 per cent since hitting a 2-1/2-year high last month.
The euro was last down 0.24 per cent to $1.1767, and sterling last traded at $1.3188, down 0.45 per cent on the day, after comments from Bank of England policymakers that were interpreted as dovish.
“Comments coming out (from BoE policymakers) uniformly signalled a dovish and cautious stance among policymakers and indicated a growing debate internally on the path for interest rates forward,” said Neil Jones, Mizuhos head of currency sales for hedge funds in London.
The Mexican peso gained 1.49 per cent versus the U.S. dollar at 18.75 after NAFTA trade ministers spoke of some progress in talks about the trade deal.
Oil prices steadied after losing ground, as expectations of high US production and exports offset concerns that fighting between Iraqi and Kurdish forces could threaten the country's crude output.
US crude rose 0.4 per cent to $52.08 per barrel and Brent was last at $58.24, up 0.73 per cent on the day.