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US stock market in bloodbath as focus shifts to dollar

US stock market in bloodbath as focus shifts to dollar
‘Concerns further stimulus may not be forthcoming this year may be part of reason why S&P 500 has fallen,’ expert says

By Ovunc Kutlu

ANKARA (AA) - Indexes on the US stock market ended Monday in red territory as investors shift focus on the dollar as a safe haven to preserve positions from uncertainty in American fiscal aid because of the COVID-19.

The Dow Jones ended 1.8% lower, while the S&P 500 was down 1.1%. The S&P 500 VIX index, also known as the fear index, jumped 6.9% to signal high volatility in equities.

The Nasdaq closed 0.13% down. FAANG tech stocks -- Facebook and Google parent Alphabet –each shaved around almost 2%.

The decline in stocks and commodities came right before US Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin appear Tuesday before a House of Representatives Financial Services Committee hearing on fiscal policy.

While the positive impact of the US' $2 trillion bill passed in March is deteriorating, and Congress agreeing to a new stimulus deal more unlikely, investors are cashing in their positions in commodities and hoarding the dollar as a safe bet against uncertainties of COVID-19.

"Concerns that further stimulus may not be forthcoming this year may be part of the reason why the S&P 500 has fallen by a little over 2% today," Oliver Allen, a markets economist at London-based Capital Economics, said in a note to clients.

The dollar index, which measures the value of the American dollar against a basket of currencies soared almost 0.7% -- its biggest daily gain since Sept. 8.

"Whereas in March there was a great deal of uncertainty around the policy response to the crisis, extensive monetary and fiscal support has now been put in place to limit the economic damage from the pandemic," said Simona Gambarini, a markets economist at Capital Economics.

"There were signs up until early September that investors were worried about rising cases in the relative performance of sectors and equity indices," she added.

Recently popular commodities, like gold and silver, took the biggest hits Monday, followed by Bitcoin-led cryptocurrencies.

The price of spot gold plummeted nearly 2% to $1,912 per ounce, it's largest daily percentage loss since Aug, 19. Silver slumped more than 7% to $24.7 -- its biggest decline since Aug. 11.

Bitcoin fell nearly 3.5%, -- while Etherium and Ripple was down around 6.8% and 5.9%, respectively.

source: News Feed
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