DJIA drops 104 (1%) to 10286, S&P 500 loses 11 (1%) to 1092, Nasdaq Comp falls 17 (0.8%) to 2173. It’s the Dow’s lowest close since Nov. 13. Dollar rises again, crude, gold, stocks all drop.
Markets jarred by continued debt problems in Greece and Dubai, and warnings to the US and UK. S&P puts Greece on credit watch and Fitch downgrades the nation. Moody’s downgrades several Dubai corporations, and also warns larger nations like the US and UK to get their financial houses in order.
But the key word in that paragraph is “continued.” Greece and Dubai’s problems aren’t exactly new (neither are the US or UK’s, for that matter,) but in a top-heavy market, it’s a perfect excuse to sell. Since the S&P 500 rose as high as 1119 during Friday’s session, stocks have been dropping, and in fact have been in something of a holding pattern since mid-November.
The dollar rose sharply today, with the dollar index up 0.6%, and the euro tumbling down below $1.47. Does anybody else find it ironic that the dollar is still, even despite all the slings and arrows being thrown at it, considered a safe haven?
So, yesterday, I said, what does it say about the economy that the Fed’s keeping interest rates at zero. Today, I’m saying, what does it say about the global economy that when push comes to shove, the dollar is still considered a safe haven.
Also, and this is a point UBS’ Art Cashin has been pounding for weeks, with every trade seemingly going in the same direction – against the dollar – any break in that flow potentially will be a big washout. And while within days just about everybody was saying Dubai’s problems were well contained, well, maybe they weren’t so well contained.