Wall Street may be underestimating the dollar’s jump to a two-year high.
“With each passing day, the dollar is rising. This creates more headwinds for multinational companies in the market in general,”fast money“A strong dollar, as inconsequential as it may be, is not good for the market,” trader Jay Adami said on Tuesday.
Wednesday , dollar index It reached its highest level since March 25, 2020. The index is up 10% from last year. The timing coincides with the fourth-quarter earnings season.
The movement of the dollar is also notable against Japanese Yen (JPY)It also reached its highest level in two decades.
“If you take that money back home, and you get paid less whatever currency you bring back home,” trader Karen Finnerman said. “For me, that would be McDonaldwhich already at this point now has a little more than half of its business outside the US, so they wouldn’t be the ones to benefit. They will be the victim.”
But some groups may thrive. Trader Steve Grasso is an expert in a few pockets, including the facilities to outpace a rising dollar.
“They have predictable demand and with them predictable profits as well,” he said. “No one likes to turn off the lights in your house once you have lights in our house.” “Whether it’s about yield or whether it’s the nature of its predictability, these things are usually bought during a recession or a price-rising environment.”
The Utilities Sector Selection SPDR Fundwhich tracks the sector, is up more than 7% so far this year.
Grasso also sees retailers benefit from the performance of budget shopping.
For all trader disclosures, go to cnbc.com/fast-money/.