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By Alden Bentley and Elizabeth Howcroft
NEW YORK/LONDON (Reuters) -Profit-taking capped global stock markets on Friday after a week of record-setting advances fueled by a series of dovish central bank signals, while the dollar struggled to extend a gain as U.S. yields ticked lower.
The S&P 500, Nasdaq and Dow sought direction from the open, with the benchmark S&P closing near flat even as it posted its biggest weekly gain of 2024. The MSCI World Equity Index fell 0.26%, but went up 1.8% since late last Friday, its biggest weekly gain this year.
"It's been a busy week and it's one of those Fridays where it just feels like every participant is tired. There's no huge news to drive anything one way or the other, so you're seeing a market that's hovering around the unchanged line," said JJ Kinahan, CEO of IG North America and president of Tastytrade in Chicago.
A surprise rate cut by Switzerland's central bank on Thursday helped push markets to new highs, as traders realized that major central banks around the world would not necessarily wait for U.S. Federal Reserve rate cuts before delivering their own.
Traders also drew confidence from the Bank of England being more dovish than expected, saying the economy is "moving in the right direction" for it to start cutting rates.
On Wednesday, the Federal Reserve left the fed funds rate alone at 5.25% to 5.50% but indicated it was still prepared to lower rates by 75 basis points this year, despite a worrying uptick in U.S. inflation and economic growth solid enough to maybe even dodge a soft landing.
It said that recent high inflation readings had not changed the underlying story of slowly easing price pressures.
The S&P 500 on Friday fell 0.14%, to 5,234.18, the Dow fell 0.77% and the Nasdaq Composite gained 0.16%, to 16,428.82. For the week they rallied 2.3%, 2.0% and 2.9%, respectively.
Europe's STOXX 600 fell 0.03%, after touching a new all-time high, while London's FTSE 100 rose 0.6%, helped by expectations that the Bank Of England would cut rates sooner than previously thought. BoE Governor Andrew Bailey told the Financial Times that the expectation of more interest rate cuts this year on a whole was not "unreasonable".
"I think there might be some profit-taking at the end of the week, just because of the amount of data that we've seen and the fact that we have seen more positive surprises," said Baylee Wakefield, multi-asset fund manager at Aviva.
Trading may also subside in the lead-up to Easter next weekend, Wakefield added.