US STOCKS edged lower yesterday on the heels of strong gains in the prior week, as investors weighed fluctuations in the dollar and its impact on other markets, including crude prices.
Equity markets fluctuated between modest gains and slight losses, tracking the movement of energy stocks as crude oil prices were caught between the weakness in the US dollar and concerns about oversupply. The S&P 500 energy sector was up 0.2 per cent after earlier gaining as much as 0.9 per cent.
The action in the dollar has closely affected stocks of late as traders anticipate monetary policy tightening by the Federal Reserve sometime later this year.
The 20-day correlation between the dollar index and the S&P 500 sits at minus 0.79. The dollar index was down 0.9 per cent on the day.
“People are now way too focused on earnings, which start in a week or two, and what the impact of the stronger dollar will be and until that happens it is going to hold the market in check,” said Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.
While the dollar’s rise has been beneficial for consumers, its rapid strengthening has been a problem for a large portion of the market, such as commodities firms and exporters.
The Dow Jones industrial average fell 11.61 points, or 0.06 per cent, to 18,116.04, the S&P 500 lost 3.68 points, or 0.17 per cent, to 2,104.42 and the Nasdaq Composite dropped 15.44 points, or 0.31 per cent, to 5,010.97.