Dollar Rally Fuels Stock Sell-Off; Dow Loses 140
The U.S. stock market sold off on Wednesday amid light trading volumes. Some profit taking along with a weak Euro and strong Dollar triggered the decline. By the close, the Dow Jones Industrial Average had lost 140 points to 12,151. The widely watched blue-chip average traded in a range between 12,140 and 12,229.
The SPDR S&P 500 ETF (NYSE: SPY) fell 1.31% to $124.83, and in the process turned negative for the year with a loss of 0.66%. Volume was very light with around 115.5 million SPY shares trading hands compared to a 3-month daily average of 240 million.
The PowerShares QQQ Trust ETF (NASDAQ: QQQ), which tracks the performance o the NASDAQ 100, shed 1.16% to close at $55.59. Year-to-date, the QQQ is up 2.07%.
Crude oil fell back below the $100 level as a stronger Dollar led to profit taking. NYMEX crude futures shed 1.76% to $99.56 while ICE Brent contracts fell 1.80% to $107.30. In ETF trading, the United States Oil Fund (NYSE: USO) posted a decline of 1.79% to close at $38.36.
Gold was active as well on Wednesday as a rising Dollar pressured prices. COMEX gold futures lost 2.56% to $1,554.70 while the SPDR Gold Truse ETF (NYSE: GLD) fell 2.49% to $151.05. COMEX silver futures were also under pressure, plunging almost 6% to $27.03. Both of these markets should be worth watching on Thursday and Friday.
Treasuries moved strongly higher on the day amid the risk off sentiment. The iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) surged 1.85% to $120.64. The yield on the 10-Year Note fell 8.2 basis points to 1.92% on the session.
A strong U.S. Dollar was the focal point driving the poor sentiment on Wednesday. Dollar Index futures posted strong gains and the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the greenback versus a basket of foreign currencies, added 0.94% to $22.55. The closely watched EUR/USD pair fell 0.90% to $1.2940, slicing through the key $1.30 support level.
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