Further dollar weakness would likely be an unwelcome development for economies such as Europe and Japan, as their own rising currencies threaten to weigh on growth and efforts to spark inflation.
The dollar is down around 3% year-to-date, after rising for each of the last two years. The greenback slid nearly 10% in 2017.
A weaker dollar makes U.S. exports more competitive abroad and helps U.S. multinational companies by making it cheaper for them to convert profits back into their home currency. That’s potentially good news for a rally in U.S. stocks that has slowed in recent weeks after coming within distance of all-time highs.
A 10% fall in the value of the dollar against a basket of trade-weighted currencies would increase 2020 earnings per share by about 3%, Goldman said. Goldman analysts expect the dollar to fall another 5% over the next 12 months.
Other assets are already benefiting from the dollar’s drop. Gold, which like many commodities is priced in the U.S. currency and becomes more affordable to foreign buyers when the dollar falls, stands near its historic high, part of a rally that has driven the S&P/Goldman Sachs Commodity Index .SPGSCI 34% higher since late March, as of Monday.
Developing countries are also likely to cheer a weaker dollar as it makes it cheaper for them to service debt denominated in the U.S. currency.
Federal Reserve officials left interest rates near-zero and pledged to continue making huge purchases of government-backed bonds as the central bank tries to help the United States economy weather the pandemic’s ongoing hit.
“The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic,” the central bank’s policy-setting Federal Open Market Committee said in its January policy statement.
Fed Chair Jerome H. Powell, speaking at a news conference on Wednesday, said the resurgence of the virus was “weighing on economic activity and job creation,” and that the economic outlook hinges crucially on the pandemic itself.
"I think the market expected that by now we would be talking about loosening, not tightening restrictions," he said. "On the vaccine rollout, this is very problematic for the near term. It is very critical for shaping the growth bounce back, and these issues are just adding more delay to that."
The Dow Jones Industrial Average lost 633.87 points, or 2.1%, to 30,303.17 for its worst day since Oct. 28. The S&P 500 dropped 2.6% to 3,750.77, slipping from a record high and suffering its biggest drop in three months. Wednesday’s steep losses wiped out the 2021 gains for the S&P 500 and it’s now down 0.1% on the year. The tech-heavy Nasdaq Composite slid 2.6% to 13,270.60.
Boeing fell nearly 4% after its earnings report showed its 2020 net loss hit a record of $11.9 billion amid the 737 Max grounding and the coronavirus pandemic. Shares of AMD tumbled more than 6% even after the chipmaker posted revenue and earnings that beat Wall Street’s already high expectations.
But it was intensifying speculative behavior among retail investors that was causing the most concern. Heavily shorted names, including GameStop and AMC Entertainment, continued to be pushed higher by amateur day traders in online chat rooms. Some investors are worried about mounting losses by hedge funds spilling over to other areas of the market as those funds sell other securities to raise cash. Investors are also concerned the speculative behavior is a sign the market is overvalued and a pullback is near.
“We’ve run up so much and this is healthy profit taking,” said John Davi, founder and CIO of Astoria Portfolio Advisors. “There has been a tremendous market melt-up in the past two months. When the market goes up parabolically, you will see speculative behaviors from a lot of investors.”
American Airlines Group Inc. said it has accepted delivery of five Boeing 737 MAX family aircraft year-to-date and expects an additional six MAX aircraft to be delivered in the balance of 2021 and 10 MAX aircraft in 2022.
The airline in a Securities and Exchange Commission filing Friday said it has financing commitments in place for three of the six MAX aircraft to be delivered in the balance of 2021. American Air said it doesn't have any financing commitments in place for the 10 MAX aircraft to be delivered in 2022.
"We have the right to defer all of the 13 MAX aircraft deliveries that do not have committed financing to 2023 or 2024," the company said.
American said it hasn't accepted any Boeing 787 aircraft year-to-date and expects 19 787 aircraft to be delivered in the balance of 2021 and none in 2022. The company said it has financing commitments in place for all 19.
The company said it accepted delivery of one Airbus A321NEO aircraft year to date. American expects an additional 15 NEO aircraft delivered in the balance of 2021 and 26 in 2022. The company said it has financing commitments in place for all 15 to be delivered in the balance of 2021, and doesn't have in place financing commitment--third party or backstop--for any of the 2022 NEO deliveries.
Three BlackBerry executives, including the chief financial officer, sold $1.7 million of the telecoms technology firm's stock in the early days of this month's meteoric share price rise, filings with securities regulators show.
The executives sold their holdings on Jan. 20 at prices ranging from $12.63 to $13.01, nearly double what the stock had been trading at a week earlier.
BlackBerry shares climbed as high as $28.77 in New York on Wednesday and ended trading on Thursday at $14.65.
Chief Financial Officer Steve Rai sold almost 33,000 shares, his entire position in the company, according to a filing made with the U.S. Securities and Exchange Commission on January 21, in a trade valued at $428,731.
Mark Wilson, the company's chief marketing officer, sold 78,500 shares, worth $991,455, according to a filing.
Billy Ho, who leads divisions within Blackberry, sold $259,000 of shares.
All of the executives have sold stock periodically over the past year. The disposals at the start of the Reddit-driven rally represent the largest for the executives in the last year, according to filings.
The financial company said neither firm restricted buying or selling basic options, though both firms did adjust margin requirements on select stocks to ensure clients had sufficient assets to pay for stock purchases. Both firms also restricted certain advanced options strategies, it said.
In recent days, certain stocks, including GameStop Corp. and AMC Entertainment Holdings Inc., have become part of what is being called a "short-squeeze," with volumes jumping and prices fluctuating wildly.
Schwab said both firms put in place some restrictions on certain types of options transactions to help mitigate risk. For example, they aren't allowing clients to sell naked call options in order to mitigate an unlimited risk situation. These decisions are based on risk and volatility and are made on an individual security basis.
Both firms, as normal course of business, review and alter margin requirements in highly volatile securities. As margin requirements increase, clients are required to hold more equity in their accounts to make trades in these securities.
For GameStop, for example, both firms changed the requirement to 100%, thereby removing margin from the security. This process began Jan. 13, and since that time, clients have been restricted from using GameStop as collateral for a margin loan; before Jan. 13 clients could do so in a limited way.
On Monday, the tech-heavy Nasdaq composite sold off 2.5%, its worst day since Jan. 27. The S&P 500 moved down 0.8%, while the Dow Jones Industrial Average traded up 0.1%.
Among the Dow Jones leaders, Apple (AAPL) slid 3%, while Microsoft (MSFT) descended 2.7%. Apple stock fell further below its 10-week line, while Microsoft is testing a recent buy point. Disney (DIS) is back in buy range after Monday's sharp gain.
Tesla (TSLA) dived 8.55% Monday, breaking down through its 50-day support level.
Some investors might end their search with Bitmain, but plenty of other chipmakers could still benefit from the crypto mining boom. Let's take a closer look at three of those companies: NVIDIA (NASDAQ:NVDA), AMD (NASDAQ:AMD), and Intel (NASDAQ:INTC).
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