Apple takes a bite out of the market, but dollar hits four-year high

The S&P 500 index dropped 1.6 percent to close at 1,966. The Dow slumped 1.5 percent to close at 16,946. The Nasdaq composite, which is dominated by tech stocks, plunged 1.9 percent to 4,467. It was the worst day for all three indexes since July 31.

Mark Lennihan/AP/File
This Jan. 4, 2010 file photo shows an entrance to a Wall Street subway station in New York.

The dollar hit a four-year high as the yield difference between U.S. and German bonds widened the most in nearly 15 years on Thursday, while global equity markets fell sharply as the stronger dollar pointed to potential earnings losses.

The strong dollar slammed oil and other commodity prices, spurred the safe-haven buying of gold and sparked a sell-off on Wall Street that tumbled the benchmark S&P 500 index 1.6 percent in the biggest single-day loss since July 31.

The dollar index, which measures the greenback against a basket of major currencies, rose to a four-year high of 85.485. The index pared some gains but still rose 0.24 percent at 85.239.

Weak European economic data on Wednesday also helped push the euro lower. The euro fell as low as $1.26955 on trading platform EBS, its lowest since November 2012, as the U.S.-German yield gap is a key driver of exchange rates.

Selling in the euro, which was last off 0.32 percent against the dollar at $1.2738, quickened after the single currency sank below the $1.2750 level, traders said.

The spread between benchmark U.S. and German 10-year debt was 156 basis points at one point, close to the recent 15-year highs of 158 basis points.

Ten-year German Bund yields fell to 0.976 percent, while 10-year U.S. Treasury yields slipped to 2.5076 as the price rose 17/32, or more than half a point.

Companies in the S&P 500 derive almost half their revenue from abroad, which is why a 6.3 percent gain in the dollar index so far in the third quarter from a year ago, and its impact on earnings, helped spark such a sell-off on Wall Street.

The strong dollar can be detrimental for companies, said Robbert Van Batenburg, director of market strategy at Newedge USA LLC in New York.

"In the tech space, that's where you'd probably see a disproportionate headwind from the dramatic increase in the dollar... human capital is their biggest input cost," he said.

Stocks on Wall Street fell more than 1.5 percent, and pushed MSCI's all-country index down 1.2 percent to 418.62. The FTSEurofirst 300 index of top European shares retreated, closing down 0.92 percent at 1,373.09.

The Dow Jones industrial average closed down 264.26 points, or 1.54 percent, to 16,945.8. The S&P 500 slid 32.31 points, or 1.62 percent, to 1,965.99 and the Nasdaq Composite lost 88.47 points, or 1.94 percent, to 4,466.75.

Apple shares closed down 3.81 percent at $97.87 after the firm pulled back an update to its new operating system, which some users complained caused a drop in cellular service and an inability to use the fingerprint-reading Touch ID feature on its new phones.

Brent crude hovered around $97 a barrel after earlier falling as abundant supply and the strong dollar largely outweighed worries about Mideast conflict.

Brent settled up 5 cents at $97.00 a barrel. U.S. crude settled down 27 cents at $92.53 a barrel.

Gold rebounded sharply from a nine-month low as the sharp sell-off in U.S. equities prompted investors to buy bullion as a safe haven. Spot gold rose 0.4 percent to $1,222 an ounce after earlier hitting a low of $1,206.85 an ounce, its weakest since Jan. 2

Three-month copper on the London Metal Exchange closed down 0.7 percent at $6,695 a tonne.

(Reporting by Herbert Lash; Additional reporting by Marc Jones in London; Editing by Dan Grebler)

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Apple takes a bite out of the market, but dollar hits four-year high
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2014/0925/Apple-takes-a-bite-out-of-the-market-but-dollar-hits-four-year-high
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe