Dollar rises while global stock index falls; inflation and tariffs in focus 

The U.S. dollar index rose modestly on Thursday while MSCI's global equities gauge fell as stronger-than-expected megacap earnings reports were balanced against signs of rising inflation while investors were anxious ahead of U.S. President Donald Trump's August 1 deadline for trade agreements.

Trump gave Mexico a 90-day reprieve from higher tariffs to negotiate a broader trade deal but was expected to issue higher final duty rates for most other countries as the clock wound down on the Friday deadline.

U.S. Treasury yields had briefly pared declines in choppy trading earlier in the day after data showed that U.S. inflation increased in June as tariffs on imports started raising the cost of some goods, supporting economists' expectations that price pressures would pick up in the second half of the year.

Thursday's data also showed fewer-than-expected Americans applied for unemployment benefits while second-quarter U.S. labor costs increased slightly more than expected on a pick-up in wage growth.

The Federal Reserve kept rates steady on Wednesday, and Chair Jerome Powell said that the central bank needed to wait for more data before deciding whether to adjust rates in September, drawing further criticism from Trump on Thursday.

But while Powell's comments had sent equities lower on Wednesday, indexes saw some support on Thursday from better-than-expected results out of Microsoft MSFT and Meta Platforms META.

With the economic data appearing to support the Fed's more hawkish stance and an anxious wait for Friday's payroll report and Trump's tariff deadline, investors had an awful lot to handle this week, said Kevin Gordon, senior investment strategist at Schwab.

"This is one of those weeks where it's almost too much information to digest, so the market is ignoring it all and staying in a tight range," said Gordon. However, he noted that megacap strength was countering weakness elsewhere in the market including in small cap companies, which have less latitude to cope with higher prices.

"You really only have communications services and parts of technology that are holding you up today. Breadth is generally pretty weak," the strategist said.

On Wall Street , indexes lost some steam as the session progressed. At 2:41 p.m. the Dow Jones Industrial Average < .DJI > fell 110.45 points , or 0.25 %, to 44,349.01 , the S&P 500 < .SPX > rose 4.11 points , or 0.06 %, to 6,366.77 and the Nasdaq Composite < .IXIC > rose 75.39 points , or 0.35 %, to 21,205.06 .

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In currencies, the dollar was a mixed bag. The dollar index DXY, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.16% to 99.95.

The Mexican peso USDMXN strengthened 0.34% versus the dollar at 18.827 after the trade announcement.

The euro EURUSD was up 0.23% at $1.143 but against the Japanese yen USDJPY, the dollar strengthened 0.82% to 150.71. The Bank of Japan held interest rates steady and increased its inflation forecast.

The Korean won USDKRW weakened 0.21% against the dollar after rising earlier following Trump's announcement that the U.S. would charge a 15% tariff on imports from South Korea, which would in return invest $350 billion in U.S. projects and purchase $100 billion in U.S. energy products.

In Treasuries, the yield on benchmark U.S. 10-year notes US10Y fell 1.8 basis points to 4.36%, from 4.378% late on Wednesday while the 30-year bond (US30YT=RR) yield fell 2.7 basis points to 4.8857%.

The 2-year note (US2YT=RR) yield, which typically moves in step with interest rate expectations for the Federal Reserve, rose 0.8 basis points to 3.945%, from 3.937% late on Wednesday.

In oil markets, prices fell 1% after rising in each of the prior three sessions as investors considered the extension of an existing trade deal between the U.S. and Mexico and a surprise build in U.S. crude stocks put pressure on prices.

U.S. crude CL1! settled down 1.06%, or 74 cents at $69.26 a barrel while Brent BRN1! settled at $72.53 per barrel, down 0.97%, or 71 cents on the day.

Gold prices rose as traders turned to the safe-haven asset on tariff uncertainty. Spot gold GOLD rose 0.62% to $3,294.89 an ounce.