* World stocks pull back from record
* S&P posts best August since 1986
* Dollar hits two-year trough as Fed commits to easy policy
(Updates with close of U.S. markets, oil settlement prices)
By Chuck Mikolajczak
NEW YORK, Aug 31 (Reuters) - A gauge of global stocks pulled
back from a record high on Monday but locked in a fifth straight
month of gains while the dollar remained weak as investors
adjust to the policy shift outlined by Federal Reserve Chair
Jerome Powell last week.
U.S. stocks were mostly lower, with the Dow Industrials and
the S&P 500 in the red, while the Nasdaq rose solidly. The S&P
gained more than 7% for the month to notch its best August since
1986 in what is traditionally a softer month for stock
performance.
The Nasdaq fared even better than the S&P for the month, up
nearly 10% as it rallied for a fifth straight month.
"After such a strong summer run we're reverting back to the
old pandemic playbook, so we see tech outperforming," said Mona
Mahajan, senior U.S. investment strategist at Allianz Global
Investors in New York. "Really, that's a defensive move as
people think about stay-at-home more as we're heading toward
that fall season."
Fed Vice Chair Richard Clarida on Monday expanded on
Powell's comments from last week, saying that with the U.S.
central bank's new policy view, a low rate of unemployment does
not on its own trigger higher interest rates. Last week, the Fed
said its new strategy plan is to use higher inflation when the
economy is robust to offset the impact of periods of weaker
prices. Monday marked the day first trading day for the revamped
Dow, with Salesforce.com CRM.N , Amgen Inc AMGN.O and
Honeywell International Inc HON.N joining the 30-component
index, replacing Exxon Mobil Corp XOM.N , Pfizer Inc PFE.N
and Raytheon Technologies Corp RTX.N . Honeywell ended the
session lower while a move higher late in the day pushed
Salesforce and Amgen to the plus side. The Dow Jones Industrial Average .DJI fell 227.7 points,
or 0.79%, to 28,426.17, the S&P 500 .SPX lost 8.04 points, or
0.23%, to 3,499.97, and the Nasdaq Composite .IXIC added 79.82
points, or 0.68%, to 11,775.46.
The dollar edged lower against a basket of major currencies
on the day and suffered a fourth straight monthly decline.
In Europe, stocks closed lower on the day as financial
shares were weighed down by soft inflation data in Germany and
Italy, but managed to close higher for the month. Trading in
London was closed for a public holiday.
MSCI's world equity index .MIWD00000PUS rose 5.9% in
August for a fifth straight month of gains as massive monetary
and fiscal stimulus outweighs concern about the outlook for a
world economy battered by the coronavirus. The index hit a
record of 587.77 on Monday before reversing course on the day.
The pan-European STOXX 600 index .STOXX lost 0.62% and
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.30%.
The expectations for the Fed to keep interest rates lower
for an extended period again kept the dollar in check, with a
fourth straight month of declines, marking its longest loss
streak since 2017. The greenback, as measured against a basket
of six other major currencies, hit a low of 91.989, its lowest
level since May 1, 2018. The dollar index =USD fell 0.075%, with the euro EUR= up
0.29% to $1.1938.
Benchmark 10-year notes US10YT=RR last rose 6/32 in price
to yield 0.7113%, from 0.729% late on Friday. Oil prices gave up earlier gains. Brent crude oil dipped
from a five-month high, as global demand struggled to regain
levels prior to the coronavirus pandemic. U.S. crude CLc1 settled down 0.84% at $42.61 per barrel
and Brent LCOc1 was at $45.28, down 1.16% on the day.
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GRAPHIC-Emerging markets http://tmsnrt.rs/2ihRugV
GRAPHIC-MSCI's World Stock Index https://tmsnrt.rs/2DcGXQD
GRAPHIC-Global markets, asset performance https://tmsnrt.rs/3hJ4UOL
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