NEW YORK The U.S. dollar rose against the yen and euro on Monday and U.S. stocks closed at a new record as the outlook for the U.S. economy continued to brighten following last week's strong jobs report.
Financial shares led the way on Wall Street, with Bank of America (BAC.N) up 5.2 percent after it reached a settlement with bond insurer MBIA Inc. (MBI.N)
The euro fell against the greenback after European Central Bank President Mario Draghi said the bank, which cut interest rates last week, is watching economic data and is ready to take further action if needed.
Purchasing managers indexes on Monday showed recession dragged on euro zone companies and business growth flagged in China, adding to a report on Friday that U.S. corporate growth slowed in April.
Many analysts have expected a pullback in U.S. equities for weeks now, as the S&P 500 index continues to post historic highs. Wall Street has largely avoided a correction as traders have used weakness as an opportunity to add to long positions.
Monday's gains follow a strong run in stocks since the start of the year. Accommodating monetary policies that have kept interest rates low, as well as solid earnings, have helped lift the S&P 500 13.5 percent so far this year.
"Since the beginning of the year, the bulls have remained in control of this market," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
"As long as you continue to have decent earnings reports and support from the central banks, it will be hard to derail the market, at least in the short term."
U.S. employment rose more than expected in April, with 165,000 jobs created, and hiring was much stronger than thought in the previous two months, the U.S. government said on Friday. The report eased concerns raised by other data that had pointed to the U.S. economy losing steam.
The Dow Jones industrial average .DJI fell 5.07 points or 0.03 percent, to end at 14,968.89, the S&P 500 .SPX gained 3.08 points or 0.19 percent, to 1,617.5 and the Nasdaq Composite .IXIC added 14.34 points or 0.42 percent, to 3,392.97.
The MSCI world equity index .MIWD00000PUS edged up less than 0.1 percent, weighed by declines in some European stocks.
U.S.-dollar denominated Nikkei futures touched a fresh five-year high.
Brent crude futures settled up 1.2 percent at $105.46 as supply concerns followed Israeli air strikes on Syria on Friday and Sunday. Trading was choppy, however, as worries about the weak data from China and the euro zone sparked demand concerns.
"In another lifetime, the Israeli headlines would have sent the market screaming higher, but there does seem to be this malaise about economic contraction," said Stephen Schork, the editor of The Schork Report in Pennsylvania.
U.S. crude futures settled up 0.6 percent at $96.16.
The U.S. dollar rose for a third straight session against the yen and looked set to make another run at the 100-yen level after last week's surprisingly strong U.S. jobs data rekindled optimism about the U.S. economy.
The yen lost 0.3 percent to 99.37 per U.S. dollar, having hit 99.45, its weakest since April 25, according to Reuters data.
The euro also weakened against the greenback after Draghi's comments on possible further easing from the ECB, but stayed within last week's range. The euro zone single currency was recently down 0.3 percent at $1.3077.
U.S. Treasuries prices slipped as investors continued to digest Friday's better-than-expected jobs report, which sent yields surging to their highest in three weeks.
U.S. government bonds are expected to stay at the relatively higher yields as investors prepare for $72 billion in new supply this week. Benchmark 10-year Treasuries yielded 1.76 percent, up from 1.74 percent on Friday and up from 1.62 percent before the jobs data was released.
Billionaire investor Warren Buffett said in an interview with CNBC that the U.S. economy is gradually improving, but low interest rates have made bonds "terrible investments" while stocks remain "reasonably priced."
Gold edged lower in light trading, weighed by continued outflows in bullion-backed exchange-traded funds, and investors were still weighing the metal's inflation-hedge appeal after last week's encouraging U.S. jobs data.
Spot gold was recently down less than 0.1 percent at $1,469 per ounce.
(Additional reporting by Caroline valetkevitch, Wanfeng Zhou, Karen Brettell and Anna Louie Sussman; Editing by Dan Grebler, James Dalgleish and Nick Zieminski)