Stocks are lower and the dollar is surging in trading Tuesday.
Near 2:30 p.m. ET, the Dow was down about 280 points, the S&P 500 was down about 29 points, and the Nasdaq was down about 68 points.
In an afternoon email, New York Stock Exchange floor governor Rich Barry wrote: “It was just last Friday that the market suffered its biggest one-day decline in over two months, yet, today looks like it could be worse.”
The dollar continues to surge following its rally Friday, when the jobs report showed better-than-expected employment growth.
The euro fell to as low as $US1.0698 against the dollar, pushing below $US1.07 for the first time since 2003. The market is focused on the European Central Bank’s quantitative easing program that began this week. As Business Insider’s Mike Bird explains, this, combined with the expectation that the US Federal Reserve will raise interest rates this year, is putting pressure on the euro. Higher US interest rates increase demand for the dollar. According to the FT, economists are forecasting that the euro could fall to parity with the dollar this year.
European government bonds rallied. Several yields on 10-year notes tumbled to record lows, as seen in the chart below tweeted by Bloomberg’s Niraj Shah.
US treasury yields were also lower, with the benchmark 10-year note at 2.1%.
Gold rebounded after falling more than 2% in premarket trading. The commodity fell nearly 3% on Friday, and according to Barclays, the strong US macroeconomic environment increases the downside risks for gold.
In economic data, the NFIB Small Business Optimism Index inched up to 98.0 from 97.9 last month, missing the estimate of 98.9.
The new Job Openings and Labour Turnover Survey report from the Bureau of Labour Statistics showed that US companies had 4.998 million job openings in January, slightly lower than the 5.050 million expected by economists. December’s number was revised down to 4.877 million from an earlier estimate of 5.028 million.
This is the seventh year of the bull market; the S&P 500 hit an intraday low of 666.79 on March 9, 2006. It is now down about 40 points (or 2%) from the all-time high reached on February 17. Stocks have erased all their gains of the year.