Wall Street sets records on rates view; dollar rises

Reuters
The curve of the German share price index DAX board at the Frankfurt stock exchange
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The curve of the German share price index DAX board, is pictured at the Frankfurt stock exchange June 19, 2014. REUTERS/Remote/Stringer

By Michael Connor

NEW YORK (Reuters) - Wall Street equities rose on Friday for a sixth straight session and hit new highs, boosted by money managers convinced that U.S. policymakers will keep a lid on interest rates through 2016.

Prices of U.S. Treasuries steadied after early declines blamed on a weak sale of inflation-linked bonds, and the dollar rose as investors chased higher U.S. bond yields.

Oil prices backed away from nine-month peaks triggered by worries about the turmoil in Iraq but held at lofty levels.

U.S. equities rallied for a sixth straight session and took the benchmark Standard & Poor's 500 and Dow Jones industrial indices to record highs. For the week, the Dow was up about 1 percent and the S&P 500 gained 1.4 percent.

The Dow .DJI rose 25.62 points, or 0.15 percent, to end at 16,947.08. The S&P 500 .SPX gained 3.39 points, or 0.17 percent, to finish at 1,962.87. The Nasdaq Composite .IXIC added 8.71 points, or 0.20 percent, to close at 4,368.04.

"There continues to be this hope that the economy improves, that growth improves. But for the markets, a slow steady growth environment is pretty much nirvana," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

Federal Reserve Chair Janet Yellen on Wednesday effectively cleared the way for more Wall Street gains by suggesting that interest rates will remain low through 2016, several top U.S. money managers told Reuters.

"What (we) have is a sweet combination of a self-sustaining, long-lasting economic expansion joined with a long-lasting monetary accommodation," said Steven Einhorn, vice chairman of hedge fund Omega Advisors Inc.

Most U.S. Treasuries ended little changed, though long bond prices rallied as investors focused on inflation risks two days after the Fed played down a recent uptick in consumer price pressures.

"There’s the thought that maybe (the Fed) will let inflation run a little bit higher and not raise rates,” said Dan Mulholland, managing director at BNY Mellon in New York.

Benchmark 10-year notes US10YT=RR were last down 1/32 in price to yield 2.63 percent, up from 2.62 percent on Thursday. The notes yielded 3 percent at the beginning of the year. Prices of 30-year Treasuries were up 9/32 to yield 3.45 percent.

The higher yields helped the dollar, with the dollar index .DXY up 0.02 percent at 80.33. Against the yen, the dollar was last up 0.2 percent, at 102.12 yen JPY=, while the euro slipped 0.10 percent to $1.3597 EUR=.

Brent oil prices LCOc1 backed away from a nine-month peak as concerns receded that violence in Iraq, OPEC's second-largest producer, might disrupt supplies. Brent dropped 42 cents to $114.66 from a high of $115.71 touched on Thursday. U.S. oil CLc1 added 75 cents to $107.18.

(Reporting by Michael Connor in New York; Editing by Dan Grebler and Leslie Adler)

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