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Stocks rebound as worries about Trump's presidency fade

CNBC logo CNBC 5/19/2017 Fred Imbert

Stocks closed higher Friday as concerns about Donald Trump's presidency recede for the time being.

The Dow added 141 points, the S&P 500 gained 0.68 percent, and the Nasdaq rose 0.47 percent.

"The market is recognizing that we have a business-friendly president and administration," said Maris Ogg, president at Tower Bridge Advisors. "But the man is not laser-focused. He's all over the place."

Stocks suffered their biggest pullback of the year earlier this week after news that former FBI Director James Comey put together a memo on a conversation with Trump. In this conversation, Trump allegedly asked Comey to stop investigating former National Security Adviser Michael Flynn.

Justice Department officials announced Wednesday that Deputy Attorney General Rod Rosenstein had tapped former FBI Director Robert Mueller as special counsel, taking over the investigation into Russia's alleged meddling in the 2016 election.

"Trump's got everybody on edge, both Republicans and Democrats. Everybody thinks there's a smoking gun somewhere, and when you get something that might look like that, then people get excited," said Tower Bridge's Ogg.

Trump made his first trip overseas since taking office on Friday, first traveling to Saudi Arabi, which is planning to buy billions of dollars worth of U.S. arms.

In economic news, there were no major data released Friday. However, St. Louis Federal Reserve President James Bullard said the central bank's plans to raise rates may be too fast.

"On balance, the U.S. macroeconomic data have been relatively weak since the March...meeting," Bullard said. "U.S. inflation and inflation expectations have surprised to the downside in recent months. Labor market improvement has slowed."

The Fed is slated to meet next month, with market expectations for a rate hike near 80 percent, according to the CME Group's FedWatch tool.

U.S. Treasurys fell on Friday, with the benchmark 10-year note yield advancing to 2.249 percent and the two-year note yield near 1.283 percent.

The U.S. dollar fell against a basket of currencies, with the euro rising 0.78 percent to $1.1188.

"The US side should, however, become less USD negative, in so much as the market is starting to more realistically appraise the way politics will impact the Fed, notably via US financial conditions," said Alan Ruskin, global head of Group-of-10 foreign exchange strategy at Deutsche Bank, in a note.

"A June hike is still seen as very likely, while the 10y yield has also stopped short of the major 2.15/2.16% support line. In that sense the USD has more support, if Washington goes a little quieter, at least while the special prosecutor sets up infrastructure," he said.

CNBC's Christine Wang and Reuters contributed to this report.


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