By Christopher Whittall and Aaron Kuriloff
Gains in energy shares pushed the Dow Jones Industrial Average higher to open the final month of the year, while selling in yield-bearing stocks and government bonds accelerated.
The blue-chip index rose 66 points, or 0.3%, to 19189 on Thursday after posting in November its biggest monthly gain since March. The S&P 500 slipped 0.2%, and the Nasdaq Composite fell 1.2%.
Energy stocks were among the biggest climbers in the S&P 500, adding 1.8% as U.S. crude continued climbing. U.S. oil prices rose 4.2% to $51.49 a barrel after surging more than 9% on Wednesday in the wake of a deal from the Organization of the Petroleum Exporting Countries to cut production. Chevron posted among the biggest gains in the Dow industrials, rising 2.8%.
Investors sold real estate, utilities and consumer staples shares, known as proxies for bonds, and the yield on the 10-year Treasury note climbed to 2.473% from 2.365% at Wednesday, according to Tradeweb. U.S. Treasurys saw their worst month in seven years in November. Yields rise as prices fall.
The election of Donald Trump has boosted investors' expectations for higher U.S. growth and inflation in recent sessions, sending government debt and dividend stocks tumbling while sparking gains in the dollar and shares that tend to do better in times of economic expansion.
Some analysts said a strong jobs report Friday could increase the pace of that rotation, even as several remain concerned that investors' hopes for a newpickup in economic expansion eventually could be dashed.
"It's not clear if those expectations are going to be fulfilled," said David Lefkowitz, senior equity strategist at UBS Wealth Management Americas. "It really hinges on the success of some of these reflationary policies."
Technology shares lagged, falling 2.2% in the S&P 500 as semiconductor companies Applied Materials, Nvidia and Lam Research all lost more than 5%. The Nasdaq Biotechnology Index fell 0.8%.
European stocks slipped, after Asian shares gained overnight on the back of Wednesday's surge in crude prices.
European shares lagged behind a rally in U.S. stocks last month as investors have remained cautious ahead of Italy's constitutional referendum Sunday -- the first of a series of important votes in Europe in the coming months.
Many analysts expect Italy's reform-minded government to lose that vote, potentially unseating Prime Minister Matteo Renzi.Chris Jeffery, an asset allocation strategist at Legal & General Investment Management, said there is "market agitation about political risk" but added this "is happening against a backdrop where the global economy has surprised positively."
"On equities, we're pretty close to neutral because of these offsetting pressures: political risks on the one hand, but the economic data not looking too bad on the other hand," he said.
A string of eurozone data releases showed promising signs for the local economy Thursday. The eurozone manufacturing purchasing managers index hit its highest level in November since January 2014, according to IHS Markit.
Energy shares gained in Europe, but weakness across most other sectors dragged the Stoxx Europe 600 down 0.3%. So-called bond proxies such as utilities and real-estate stocks were among the worst-performing sectors.
Eurozone government bonds were also weaker, with the yield onthe 10-year German government bond rising to 0.340%, according to Tradeweb.
Bond investors are looking ahead to the European Central Bank's meeting next week. Most analysts expect the ECB will extend its vast bond-buying program beyond March.
The recent move higher in global bond yields has been driven mainly by expectations of higher U.S. growth and inflation that could cause the Federal Reserve to raise interest rates faster than previously expected. Higher oil prices, which also should boost inflation, have further fueled the selloff.
"The move in Treasurys has been very significant. It does capture a degree of optimism around the growth outlook for next year," said Andrew Wilson, global co-head of fixed income management at Goldman Sachs Asset Management, who thinks it is highly likely the Fed will raise rates in December.
Still, Mr. Wilson said, "we'd need to see validation of that optimism in economic data" for yields to move higher from here.
The U.S. dollar also gained on expectations of higher interest rates, which tend to boost the attractiveness of a currency. The WSJ Dollar Index, which measures the dollar against a basket of 16 other currencies, was down 0.2% Thursday, after closing at its second-highest level of the year Wednesday.
The British pound jumped after the minister responsible for the country's exit from the European Union said the U.K. would consider making payments to the EU budget to secure the best access to the bloc for trade. The pound was up 0.6% against the dollar at $1.2602.
In Asia, Australia's S&P ASX 200 closed up 1.1%, while Japans's Nikkei Stock Average also rose 1.1%, to close at its highest level of the year.
In other commodities, gold prices fell 0.4% at $1,169.90 an ounce.
--Jenny Gross contributed to this article.
Write to Christopher Whittall at firstname.lastname@example.org and Aaron Kuriloff at email@example.com
(END) Dow Jones Newswires
December 01, 2016 13:16 ET (18:16 GMT)
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