Nasdaq Volatility Surges As Dollar Rally Puts Celebration On Ice
By Callie Bost, Joseph Ciolli and Michelle Davis
?(Bloomberg) — The party has been postponed.
Less than two weeks after the Nasdaq Composite Index climbed within 1 percent of its dot-com era record, a surging dollar and interest-rate speculation have stopped the gauge in its tracks. Volatility in the Nasdaq 100 Index has surged by almost 20 percent in the past week, the biggest increase of the year on a rolling basis, as Netflix Inc. and Intel Corp. dropped.
Computer and software stocks are suddenly falling almost as much as energy companies in the Standard & Poor?s 500 Index as the appreciating dollar renews concern that earnings estimates are too high. Apple Inc., Microsoft Corp. and Google Inc., with the biggest weightings on the Nasdaq 100, generate half or more of their revenue from markets outside the U.S., data compiled by Bloomberg show.
?They?re selling down things that have worked over the past six to 12 months,? Kevin Divney, chief investment officer at Beaconcrest Capital Management LLC, said in a phone interview. ?Whenever you get back to these peaks or these milestones — Nasdaq 5,000, six-year bull market anniversary — it?s healthy to be skeptical about that.?
The Nasdaq?s retreat has come amid a broader market selloff that has erased about $600 billion from U.S. equity prices since March 2. Hedging costs measured by the Chicago Board Options Exchange Volatility Index have climbed 29 percent as the S&P 500 slid 3.6 percent.
The dollar jumped to a 12-year peak versus the euro and reached the highest in 7 1/2 years against the yen yesterday. The euro has fallen for eight straight months as the Federal Reserve wound down its quantitative easing program and signaled a rate increase just as the ECB prepared to start stimulus.
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