Stocks Tumble, Dollar Hits Two-Week High; Jobless Claims Rise
Stocks Tumble Along with Bonds as Gold Slides (Bloomberg)
Stocks plummeted today, with the global equities benchmark index sinking the most in 21 months, and bonds fell around the world after the Federal Reserve said that it may phase out its stimulus and China’s cash crunch worsened. Gold led commodities lower. “It’s a knee-jerk downward reaction because everyone is afraid that if you’re taking the punch bowl away that must be bad for markets,” Phillip Orlando, the New York-based chief equity strategist at Federated Investors, said. “The market is choosing to ignore the good news embedded in the Fed’s comments. All it’s looking at is the reduction of the accommodation.”
Dollar Hits Two-Week High on Fed Outlook (Reuters)
The dollar flew to two-week highs against major currencies today and looked pepped to further its gains after the Federal Reserve indicated that it would begin withdrawing its stimulus programs as the economy improves. “To the extent that (Quantitative Easing, or QE) represented a drag on the currency, I think that the prospect of less QE (and) higher interest rates is something that should help the dollar, particularly in an environment where some other central banks are still moving in the other direction,” said Robert Lynch, senior currency strategist at HSBC in New York.
Unemployment benefit claims rose more than expected for Americans last week, but the rise was still not enough to signal a shift from the steady pace of job growth. Specifically, claims for state unemployment benefits increased 18,000 to a seasonally adjusted 354,000, according to the Labor Department. But economists polled by Reuters expected first-time applications to rise to 340,000 last week.