U.S. Equities Slide as USD Rallies On Rate Concerns

March 10, 2015 Share Print 0

U.S. stocks fell, wiping out gains for the year, as the dollar strengthened to near a 12-year high versus the euro amid speculation the Federal Reserve is moving closer to raising interest rates.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. lost at least 1.5 percent as financial companies in the Standard & Poor’s 500 Index led declines. United Technologies Corp., Cisco Systems Inc. and Walt Disney Co. dropped more than 1.5 percent to pace losses among the biggest companies.

The S&P 500 retreated 1.2 percent to 2,055.26 at 10:33 a.m. in New York, falling below its average price for the past 50 days for the first time since Feb. 9. The Dow lost 233.05 points, or 1.3 percent, to 17,762.67.

“A continuation of dollar strength and euro destruction is certainly raising some concerns,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “I don’t think there was any one specific event or item that caused this, but the fact that it’s a trend that’s been going on for the last several weeks is concerning given the levels we’re at now.”

Concern the Fed may start raising interest rates this year amid a strengthening economy has weighed on equities and helped boost the dollar.
In his last speech as president of the Fed Bank of Dallas, Richard Fisher said the central bank should begin to gradually raise rates before the economy reaches full employment to avoid triggering a recession.

Bloomberg

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Dean Popplewell

Vice-President of Market Analysis at MarketPulse

Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.