Strong Dollar

 

Today, the Dow Jones industrial average had its worst day in four years, losing about 530 points, down 3.1 percent, to 16,460; the S&P 500 and the Nasdaq composite dropped similarly.

 

Weakness in the markets is centered around China, said Ben Garber, Moody's Analytics economist. He pointed to Chinese manufacturing activity fell to a six-year low. Substantial declines in Chinese stocks once again fueled sell-offs around the globe.

Last week, China devalued its currency, the yuan, making its goods cheaper and imported goods, like those from the U.S., more expensive.

 

The price of U.S. crude oil slid below $40 a barrel for the first time since 2009.

The decline of oil prices and of other commodities signal fading emerging market growth prospects, ensuring "continued poor results for firms in the energy and mining sectors and so is the exporting Countries.

 

The U.S. currency's value has surged over the last nine months, reaching levels against some world currencies last seen more than a decade ago. In Europe, it now costs just $1.09 to buy one euro, down from $1.37 a year ago and almost $1.50 four years ago.

The soaring dollar is crunching profits at giant U.S. multinationals, prompting Wall Street analysts to make their deepest cuts to earnings forecasts since the financial crisis and boosting the appeal of smaller, domestically focused companies.

With the expectation of Interest Rate hike, all these factors will lead the stock Market to adjust downward until stock's value equals the price.

Just a thought.