US stock markets fell on Tuesday as investors worried about rising interest rates and a strengthening dollar.
All the major US markets fell with the S&P 500 index recording its largest loss in two months, losing 34.91 points, or 1.68%. The Dow Jones industrial average fell 327.9 points, or 1.82% and the Nasdaq Composite dropped 82.64 points, or 1.67%.
Jack Ablin, chief investment officer of BMO Private Bank, said the strengthening dollar and signs that the Federal Reserve is preparing to raise rates, for the first time since the recession, had rattled investors.
“We already have analysts predicting that earnings growth will be negative in next quarter, in part because of the strength of the dollar,” he said. “Nothing particularly new happened today but maybe people have stopped worrying about Greece and the focus is more at home.”
The dollar rose to a near 12-year high against the euro on Tuesday at €1 to $1.07 as the European Central Bank began a bond buying program aimed at reviving the region’s moribund economy.
Last week the US Commerce Department released another strong labour market report, increasing the likelihood of a rate increase in the US. US interest rates have been close to zero since the 2008 financial crisis. Unemployment fell to 5.5% in February as the economy added another 295,000 new jobs.
The Fed has said it will be “patient” about raising rates amid fears that increases will derail the recovery after years of rock bottom rates and massive economic stimulus programmes. The Fed meets again next week to decide when or if to raise rates.
