Stock Market Fell with the Dollar and Then Rise Back

At the end of last month, February, the stock markets had big decline. The Dow Jones Industrial Average dropped its largest point since May 2003; it dropped 174.02 points, or 1.6%, to 10611.20. Also, the Standard & Poor’s 500-stock index declined its biggest point in six months; it fell 1.5%, or 17.43 points, to 1184.16. And the Nasdaq Composite Index lost 1.4%, or 28.30 points. Those drops were the result of the rise in oil price and a flagging dollar.

The Crude-oil rise 5.8%, or $ 2.80, to $51.15 a barrel, which was the highest settlement in nearly four months at the New York Mercantile Exchange. Also, oil is up almost 18% this year. One of the most important reasons was that the weakness dollar aids commodities that are traded in dollar terms. The dollar fell to 104.06 yen from 105.57 yen.

As a result, on the Big Board, New York Exchange Market, 2618 stocks fell and 732 rose, where 1.7 billion shares traded. On the Nasdaq Stock Market, 868 shares advanced while 2324 declined, where 2.1 billion shares changed hands. I do think that was really a big unexpected loss for most of the shareholders; however, it was also a good chance to invest, too. On the other hand, bonds fell, too. The 10-year Treasury note fell 4/32, or $1.25 per $1000 invested. It pushed the yield up to 4.283%. The 30-year bond fell 14/32 to yield 4.682%.
In contrast, golden futures, which often move in the opposite direction of the dollar because the metal is considered an alternative store of value jumped 1.7%, or 7.40, to a 2005 high of $434.50 a troy ounce.

However, the market recovered right after that big decline. Last Friday, March 11, the Dow Jones Industrial Average ended at 10774.36, and the Standard & Poor’s 500-stick index ended at 1200.28.