By Chris Prentice, Pete Schroeder
NEW YORK (Reuters) -Global equities retreated and the dollar rose on Tuesday as investors awaited fresh inflation data and further economic news later in the week.
Gold prices hit a two-week high, boosted by rising geopolitical tensions and expectations of a third U.S. rate cut by the Federal Reserve next week.
Traders awaited U.S. inflation data due on Wednesday and a meeting by the European Central Bank on Thursday.
The Dow Jones Industrial Average fell 154.10 points, or 0.35%, to 44,247.83, the S&P 500 fell 17.94 points, or 0.30%, to 6,034.91 and the Nasdaq Composite fell 49.45 points, or 0.25%, to 19,687.24.
The pan-European STOXX 600 index fell 0.5% on Tuesday, ending an eight-session winning run, with luxury stocks leading declines after weak trade data out of China.
Investors will be closely watching Wednesday’s consumer price index report for insight into the trajectory of U.S. inflation and ensuing Federal Reserve policy. A Reuters poll of economists found 90% anticipate a 25 basis point rate cut from the Fed at its Dec. 18 meeting. With an ECB rate cut all but certain, investors will be watching for clues about its policy path.
Another boost to U.S. sentiment was a report showing small business confidence climbing to its highest level in nearly 3-1/2 years in November.
Investors in emerging markets were also attuned to Brazilian President Luiz Inacio Lula da Silva undergoing surgery in Sao Paulo to drain a bleed on his brain linked to a fall at home in October.
MSCI’s gauge of stocks across the globe fell 4.28 points, or 0.49%, to 866.57.
In China, officials had shifted their monetary policy stance from “prudent” to “moderately loose” ahead of the target-setting Central Economic Work conference this week, mirroring their response in previous crises.
The Politburo meeting announcement adopted the strongest tone in decades, according to Chen Shujin, head of China financial and property research at Jefferies.
Traders are also expecting rate cuts in Europe and Canada this week and are leaning toward a 50 basis point cut in Switzerland as authorities may tap the brakes on the franc’s relentless rise against the euro.
The yield on benchmark U.S. 10-year notes rose 3.1 basis points to 4.23%, from 4.199% late on Monday.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.25% to 106.42, with the euro down 0.27% at $1.0523.
Spot gold gained 1.27% to $2,692.43 an ounce. U.S. gold futures settled 1.2% higher at $2,718.40. [GOL/]
Elsewhere in commodities, oil prices extended their climb, after rising more than 1% on Monday, on the China stimulus and possible tight supply in Europe. Investors assessed the potential regional fallout from the overthrow of Syrian President Bashar al-Assad.
Brent crude futures settled up 0.07% at $72.19 a barrel. U.S. West Texas Intermediate finished up 0.32% at $68.59 a barrel.