US stocks fell sharply wiping out gains for the year with all the main indexes falling by more than 1% shortly after the opening bell.
The slump was sparked by a strengthening dollar, continued speculation among investors that the Federal Reserve would raise the interest rates sooner than expected and a selloff overseas.
The S&P 500 declined 1.2% to 2055.26 shortly after the bell with Goldman Sachs Group Inc, Morgan Chase and other financial companies leading the declines.
According to Reuters, this marked the first time the index had fallen below its average price for 50 days since February 19 with most of its 10 main sectors trading in the red.
The Dow Jones Industrial Average fell about 188.32 points or 1.05% at 17,807.4 with at least 28 of its 30 blue chip companies in the red.
The Nasdaq Composite also dropped 53.64 points or 1.09% at 4888.80 on the 15th anniversary of attaining its all-time high.
The decline was attributed to recognition by investors of the prospect of the Federal Reserve raising the interest rates. The better-than-expected jobs report released a week ago has fevered expectation that the Federal Reserve will diverge from other central banks around the globe in effecting the hike.
Weaknesses in the European markets sparked by the continued resurgence of the dollar against the Euro also appears to have considerably weighed o the US market. The dollar now stands at a 12 year high against the Euro.
“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. told Bloomberg 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.”
To contact the reporter of the story: Jonathan Millet at email@example.com