S&P 500 Falls By Largest Amount In 2 Months, EUR/USD Test Below Parity
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Summary:
- Stock market may continue to decline.
- EUR/USD falls below parity.
S&P 500 down 2.14% Monday
As Wall Street waits for Fed Chairman Jerome Powell's address later this week and worries about inflation and a weaker economy grow, the stock market may continue to decline as the currency strengthens. On August 22, U.S. markets plunged precipitously to open the week, with the S&P 500 down 2.14% and the Nasdaq down 2.55%. The cost of gold and oil decreased as well. The S&P 500 experienced its steepest fall in two months.
Last week, the market's four-week winning streak came to an end as a result of investors' increased defensiveness and anticipation of slower economic development. According to Scott Minerd, global chief investment officer at Guggenheim, if the S&P does not rise above its 200-day moving average, the equity market could experience further losses.
S&P 500 Price Chart
EUR/USD pushing below parity
The British Pound and the Euro are having a bad day on the foreign exchange markets, as the EUR/USD and GBP/USD prices both hit new yearly lows throughout the session. Senior Strategist James Stanley talked about the Euro's problems this morning, and we covered the UK's stagflation worries last week, which have been hurting the British Pound.
It's true that the British Pound and the Euro's issues may be more closely related to what's occurring in energy markets and the crisis that is developing quickly ahead of the winter months than to a resurgent US Dollar ahead of the Federal Reserve's Jackson Hole Economic Policy Symposium.
The cost of energy in Europe is rising everywhere you turn. Natural gas prices in the UK and the European benchmark, Dutch TTF, have achieved (or are approaching) all-time highs.
Sources: finance.yahoo.com, dailyfx.com, thestreet.com
