U.S. stocks and exchange traded funds (ETFs) are in sharply negative territory this morning as the U.S. dollar strengthens and materials prices are pushed lower.
The U.S. dollar gained ground on most major currencies despite expectations that massive U.S. fiscal and monetary stimulus would hasten a decline in the dollar. The sent the PowerShares DB US Dollar Index Bearish (UUP) up nearly 1% in morning trading.
In conjunction with a rising dollar, crude oil dropped for the second straight day. Black gold fell dipped $71/barrel in electronic trading on the New York Mercantile Exchange. In general, crude oil trades inversely to the U.S. dollar. Oil is priced in dollars, so as the dollar weakens, it makes oil and other dollar-denominated assets cheaper for overseas buyers; the reverse is also true. This sent the US Oil Fund (USO) down about 3% in intraday trading.
In an attempt to gather more support for his health care reform, President Barack Obama will urge doctors to support wider insurance coverage and targeted federal spending cuts. The reform anticipates heavy spending to cover the nearly 50 million Americans who lack health insurance. It will also emphasize that current health care programs are too inefficient. The news sent the iShares Dow Jones US Healthcare (IYH) down nearly 2.5% in morning trading.