Big week for dollar, records on Wall St. as quarter ends

By Lewis Krauskopf

NEW YORK (Reuters) - The dollar was poised for its strongest week of the year on Friday, while world stock markets climbed back near record-high levels on the last trading day of the quarter.

On Wall Street, the S&P 500 and Nasdaq minted all-time highs, while European stock markets also gained.

Firming expectations for another U.S. interest rate increase by year-end, combined with U.S. President Donald Trump's tax-cut plan, have dominated markets for most of the week.

Data on Friday showed U.S. consumer spending barely rose in August but the report did little to change expectations that the Federal Reserve would raise interest rates again in December. Another report showed the Chicago purchasing management index, which gauges factory activity, came in better than expected for September.

“The economic data we got was either on target or it was slightly better-than-expected, so there wasn’t anything negative at all to put a pause on things," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

"Generally, the overall economic backdrop is very solid. In a bull market when you don’t have bad news you tend to get up moves in the market,” Frederick said.

The Dow Jones Industrial Average (.DJI) rose 23.89 points, or 0.11 percent, to 22,405.09, the S&P 500 (.SPX) gained 9.3 points, or 0.37 percent, to 2,519.36 and the Nasdaq Composite (.IXIC) added 42.51 points, or 0.66 percent, to 6,495.96.

The S&P technology sector (.SPLRCT) led the way, rising 0.8 percent.

"It really sums up kind of what we saw all month and all quarter, another calm day," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

"The stats have been out there, this is one of the least volatile Septembers in history."

The pan-European FTSEurofirst 300 index (.FTEU3) rose 0.44 percent, and notched its best month of the year.

MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.45 percent. The index was within 0.5 percent of an all-time high and tallied its 11th consecutive positive month.

“The pattern that has been working, easy money but relatively slow economic growth that keeps the tightening from becoming too tight, continues to augur for a decent outlook for equities in particular,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland.

The dollar index (.DXY), which measures the greenback against a basket of currencies, fell 0.01 percent. The U.S. currency was up about 1 percent for the week, on track for its best week since December.

The euro (EUR=) was up 0.26 percent to $1.1815.

"Economically, the situation in the U.S. merits the fact that the dollar has gained," said Juan Perez, currency strategist at Tempus Inc in Washington.

Most U.S. Treasury yields edged higher, marking the end of a choppy third quarter, as investors weighed the chances of the Fed raising rates in December and Washington's implementation of tax cuts and other fiscal changes.

Benchmark 10-year notes last fell 8/32 in price to yield 2.3354 percent, from 2.307 percent late on Thursday.

U.S. crude (CLcv1) rose 0.06 percent to $51.59 per barrel and Brent (LCOcv1) was last at $56.68, down 0.84 percent on the day.

Spot gold (XAU=) dropped 0.5 percent to $1,280.15 an ounce.

(Additional reporting by Richard Leong, Chuck Mikolajczak and Dion Rabouin in New York; Editing by Nick Zieminski and Lisa Shumaker)