That’s sending global investors into the safe haven U.S. dollar. The U.S. Dollar Index was up 0.2% Tuesday to just over 108, near a new multi-decade high. The greenback is now up about 17% in the past year and it’s up double digits in percentage terms for 2022.
That’s not only a sign that investors are seeking the safety of the dollar, but it also threatens to dent U.S. companies’ earnings. That’s because sales made overseas translate into fewer dollars when the dollar strengthens. Historically, every percentage point gain in the dollar year-over-year translates into a half percentage point drop in S&P 500 earnings per share growth, according to Morgan Stanley.
All of these fears are sending investors into government bonds, too. The 10-year Treasury yield dipped to 2.92% from a Monday close of 2.99%, as bond prices rose.
The rush into safety—and out of riskier assets—is also sending the price of oil lower. WTI crude oil was down more than 4% to $99 a barrel. A stronger dollar also makes buying oil more expensive, reducing demand for barrels.
Overseas, the pan-European Stoxx 600 shed 0.4% and Hong Kong’s Hang Seng Index fell 1.3%, with Asian indexes broadly in the red amid a renewed surge of Covid-19 cases in China and the prospect of fresh lockdowns.
Here are some stocks on the move Tuesday:
Amid a renewed slide in Bitcoin prices, shares in companies exposed to digital assets fell. Cryptocurrency exchange Coinbase Global (ticker: COIN) slid 1.8% with software group MicroStrategy (MSTR), which has significant Bitcoin holdings on its books, 2.4% lower. Digital payments groups PayPal (PYPL) and Block (SQ) lost 0.1% and 0.2%, respectively.
Peloton Interactive (PTON) stock was gaining 5.2% after the company said it will stop making its own bikes and instead it will have Taiwanese manufacturer Rexon Industrial Corp. produce them.
PepsiCo (PEP) stock was up 1.2% after the company reported a profit of $1.86 a share, beating estimates of $1.74 a share, on sales of $20.2 billion, above expectations for $19.5 billion.