Comments made by President Donald J. Trump on interest rates and the US dollar led to a dip in US stocks on April 12. The president, in a media interview, said that the dollar is getting too strong and expressed his wish that the interest rates will continue to be low. The S&P 500 settled below am important level for first time from Election Day. Other than the president's comments, continuing geopolitical concerns also dampened the stock market. A strong dollar means a profit hit for US multinationals.
The DJIA or Dow Jones Industrial Average closed about 0.29 percent or 59.44 points down to 20,591. The S&P 500 lost about 0.38 percent or 8.85 points to close ar 2,344.93. Nasdaq Composite dropped by 0.52 percent or 30.61 points to 5,836.16.
Peter Tuz of Chase Investment Counsel said that markets abhor uncertainty. The comments made by the president simply added another wild card to the existing mix. Steps will be taken to stop the dollar from its further strengthening. Investors took shelter in low risk assets like defensive shares. The market's biggest falls were recorded by materials and industrial companies. The biggest gainers include telecommunications, utilities and staples. These three gave S&P 500 its highest push up.
Earnings and distractions
The Standard & Poor financial index was depressed by 0.9 percent a day in anticipation of resuts from three important banks. This result will begin corporate earnings season. Analysts expect that earnings will rise 10 percent for all the S&P 500 companies during first quarter. Data collected from Thompson Reuters show that the industrial materials indexes ended one percent lower in the day. The S&P 500, in a bellwether of things to come, ended below the 50 day moving average. This is the first time this happened since November 8. The fear gauge of Wall Street, CBOE Volatility Index made recent gains. It closed over 15 on Tuesday- the maiden time since the presdential election. Investors are cautious on the subject of increasing American tensions with Syria, North Korea and Russia. There were also the news of US warships setting sail towards Korean peninsula.
There are concerns among investors that these developments could take away Trump's attention away from a number of pro-business policies like higher infrastructure spending, tax cuts and simpler regulations. These promises have helped him in his presidential election bid. They have also pushed Wall Street to peak highs since the time he took over as president in November.