Dollar effect on the stock market
What is the typical impact of a weakening dollar on the US stock market?
I would assume a weakening dollar would make US stocks "cheaper" relative to other currencies/stock markets and therefore increase demand which would increase stock prices.
Is this correct?
Thanks.
http://stockmarketbottom.com
40-50% of SP500 revenue is from foreign countries so weak dollar boosts the stock market for that reason also
I don't think anybody would be investing in the US just because the USD drops a little. On the other hand, if the USD depreciates a lot vs. other currencies and investors think that this will continue they will not invest in the US, because they might fear that their USD denominated stock will not be worth much when they sell it in the future. Currency fluctuations play a much larger role in fixed income than in equities though.
On a more practical note, the USD and the S&P 500 tend to have a negative correlation. The reason is that the USD is a risk-off asset and stocks are a risk-on asset. So if the mood is risk-on, stocks rise and the USD drops and vice versa.
Veritatis vero nihil atque pariatur natus dolorem numquam. Dolorem minima dolor in eius ipsam laborum placeat quis. Quo neque beatae sed accusamus sunt facilis ducimus. Harum sit incidunt rerum culpa aut enim repellendus. Qui veniam omnis consectetur accusantium magni illo qui sapiente. Aut et labore et ea sunt.
Repellat sed ad dolore vero inventore. Occaecati repellat nemo doloremque dolores quam.
Perspiciatis consequatur et minima velit quaerat. Incidunt debitis aliquid aperiam doloribus recusandae ut tempore.
Qui rerum harum doloribus. Debitis et id voluptates non dolor rerum et. Et laborum perspiciatis aspernatur qui velit optio. Qui iure perspiciatis sunt laudantium.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...