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« GDP Growth Revised Higher | Main | The 10-Year Yield is Below 4.5% » November 30, 2006 The Dollar's Effect on the Stock MarketThe stock market has been freaked out lately due to the falling dollar, and the evidence shows that stocks prefer a strong greenback. Since 1973, the dollar has risen on 4,189 days, fallen on 4,130 and stayed the same on 130. On the days of the higher dollar, the S&P 500 has risen a collective 2,356%, which is about 21.3% on an annualized basis. On days of a falling dollar, the S&P 500 dropped over 55%, which works out to 4.8% on an annualized basis. For the 130 days when the dollar is unchanged, the market is up 6.7%, or about 14.1% annualized. Think of it this way, a weak dollar is basically the equivalent of a bear market for stocks. Posted by edelfenbein at November 30, 2006 11:30 AM |
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