A rising dollar and disappointing corporate forecasts pushed stocks lower and Treasurys higher on Thursday on concerns the economy will struggle to recover. The dollar jumped to a three-month high against the euro, a sign of risk-aversion in the market. Stocks were coming under pressure from the stronger dollar, which can cut into profits of U.S. companies that do business abroad. The euro slumped after Standard & Poor's lowered its debt rating on Greece, the latest European country to have credit problems.
In late afternoon trading, the Dow fell 111.17, or 1.1 percent, to 10,329.95. The broader Standard & Poor's 500 index fell 11.12, or 1 percent, to 1,098.06, and the Nasdaq composite index fell 23.33, or 1.1 percent, to 2,183.58.
The ICE Futures U.S. dollar index, which measures the greenback against a basket of foreign currencies, rose 1 percent. Gold fell, while crude oil dropped 1 cent to settle at $72.65 per barrel on the New York Mercantile Exchange.
My Note: No other reason except dollar strength will continue to pull back equity markets in emerging economy including India. We may not see fall of more than 1% on friday because we have already fallen a lot but the weakness will continue. As far as my understanding goes, the appreciation in dollar will stop after sometime and it will continue to depreciate, it may take 1 week or it may take a month but dollar appreciation is just a short term move.
-JK, Lead Associate, SLT
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