Investing.com – Take a peek at the top 5 things that rocked U.S. markets this week.
Dow Jones hit 23,000 for the first time ever
With earnings season well underway, investors piled into U.S. equities on expectations of bullish earnings from corporates which lifted the Dow Jones Industrial Average to an unprecedented level of 23,000.
Goldman Sachs Group Inc (NYSE:GS), Netflix Inc (NASDAQ:NFLX), International Business Machines (NYSE:IBM) were a few of the notable companies that reported better-than-expected earnings as the latter enjoyed its biggest one-day gain since 2009 on Wednesday.
Adding to positive sentiment on Wall Street were signs of progress on tax reform after the Senate approved the Republican-back budget on Thursday – a crucial step forward for tax reform – allowing Republicans to move ahead with tax cuts without support from Democrats.
Story of soft inflation continued
The trend of slowing inflation showed no sign of abating as wage growth and inflation remained sluggish, a Federal Reserve survey showed on Wednesday.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through October 6, showed continued weakness in wage growth while price pressures remained moderate, dampening expectations that a tight labor market would spur a rebound in inflation.
The most recent reading of the Core Price Consumer Expenditure (PCE) Index – the Fed’s preferred measure of inflation – retreated to 1.3% in September year-on-year.
That is well below the Fed's 2% inflation target.
Powell powered ahead in race to replace Yellen
The dollar fell sharply earlier this week, pressured by a drop in bond yields after a report suggested that Federal Reserve Governor Jerome Powell is leading the race to succeed Janet Yellen as next Fed Chairman.
Federal Reserve Governor Jerome Powell is the front runner to become the chair of the U.S. central bank after President Donald Trump concluded a series of meetings with five finalists on earlier this week, three administration officials said, according a Politico report published on Thursday.
The slump in the dollar, however, was short lived as investors turned attention to signs of progress on tax reform, widely expected to provide a fiscal boost to the economy.
Crude oil prices survived volatile week
Crude oil prices settled higher on Friday as expectations of continued supply disruption in Iraq amid political instability in the region supported upside momentum offsetting concerns over rising gasoline and diesel supplies.
Oil exports from Iraq's Kurdistan towards the Turkish port of Ceyhan were flowing at average rates on Friday of 216,000 barrels per day versus the usual flows of 600,000 bpd, according to a report from Reuters citing a shipping source.
The supply disruption in Iraq comes amid ongoing political uncertainty in Kurdistan after Iraqi troops regained control of two major oilfields from Kurdish forces earlier this week.
In the U.S., meanwhile, gasoline stockpiles rose for a fourth straight week while supplies of distillates - the class of fuels that includes diesel and heating oil – increased for the first time since August, the Energy Information Agency said on Wednesday.
Crude oil futures notched a weekly win, settling at $51.47 a barrel.
Investors fled Gold
Renewed hopes for tax reform boosted the dollar, forcing traders to abandon their bullish bets on gold, as the precious metal fell to a weekly loss.
Net bullish bets on gold fell to 200,100, according to a report from the Commodity Futures Trading Commission (CFTC) on Friday.
Eurozone geopolitical uncertainty, however, stemmed losses in gold after Spanish prime minister, Mariano Rajoy vowed to return Catalonia to the rule of law on Friday, a day after he confirmed that article 155 of the Spanish constitution would be invoked.
Article 155, often described as the “nuclear option”, allows the government to suspend Catalonia's political autonomy.
Gold prices traded at $1,282.60, down 0.58% on Friday.