Dollar strength stock market

The greenback has surged in recent days, with the benchmark U. S Dollar Index back above to its highest levels since But all things being equal, a dramatically stronger dollar is a huge wild card.

And contrary to political talking points that play well with the unemployed workers of the Midwest, a significantly stronger dollar may not be the best thing for the stock market SPX, Will Trump doom his economic agenda by strong-arming the Fed?

In fact, if the greenback keeps this up, it could put the brakes on the stock-market rally in And a big reason for that is because commodity companies have finally stopped the bleeding, thanks to a combination of deep cost-cutting and rising materials prices.

Profit pain for multinationals. Consider that for all the talk about automakers moving jobs to China or Mexico, General Motors GM, Or take MCD, When you have to book the bulk of your sales in weaker foreign currencies, it weighs on the bottom line. Particularly in troubled emerging markets like Brazil, where economic growth has slowed in the last year or so, a big price differential for American goods will matter materially in how businesses and consumers spend their money.

Less corporate lending and spending. A rising greenback limits lending by making it more costly to borrow in U.

In , when corporations have less profits thanks to the aforementioned currency exchange rates and headwinds abroad, tighter credit could be a big factor. Less spending on capital improvements, acquisitions or other corporate efforts could weigh on future growth outlooks as well as year-over-year comps. The result was not pleasant for investors, as U. Jeff Reeves is the editor of InvestorPlace. Follow him on Twitter JeffReevesIP. By using this site you agree to the Terms of Service , Privacy Policy , and Cookie Policy.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.

How the Dollar Affects the Stock Market

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