US stocks were hit hard on Friday to cap a third straight week of declines as investors reacted to a jump in the value of the dollar and a sharp drop in steel companies.
The Dow Jones Industrial Average and the S&P 500 both moved in the red in 2015 as a stronger dollar just a day after inching above breakeven as the latest selloff set the stage for the Federal Reserve meeting next week.
The S&P 500 index declined 12.55 points or 0.6% to 2053.4 at the close of trading on Friday while the Dow Jones Industrial Average slipped 145.91 points or 0.8% to 17749.31.
The NASDAQ composite for common stocks and securities fell 21.53 points or 0.4% to close at 4871.76. Volumes traded in all the major exchanges amounted to about 6.8 million shares- 2.1 percent off the 3-month average.
Traders claimed that the bulk of market action was driven by the rising dollar fuelling fears that its four-week climb against other currencies was impairing efforts by US companies to compete overseas.
“This whole move is being driven by one thing and one thing only, and that’s the dollar,” Rick Fier, director of execution services at Conifer Securities told the Wall Street Journal.
“It’s going to crush earnings. You’re not going to get any sort of outlook that’s any good. All the multinational [companies] are going to be in trouble.”
Utilities, major exporters and companies that make steel suffered the biggest drops as the strong dollar undercut their operations.
The dollar, on Friday, reached the highest it has been against a basket of other currencies in more than 12 years. It is on course for its strongest showing in 22 years. This gain has fuelled speculation that the Fed Reserve will increase the lending rates soon.
“We need the dollar and oil to settle down or we’re going to see more big moves,” Randy Frederick, managing director of trading and derivatives at Charles Schwab Corp., told Bloomberg by telephone.
“A lot of this volatility we’ve seen recently is related to most of the data indicating that the Fed’s rate hike is very likely coming in June.”
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