By Gareth Soloway on May 14th, 2010 1:56pm Eastern Time
Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX) are both leading the Dow Jones Industrial Average (INDEXDJX:.DJI) sharply lower today. Europe continues to be in a mess regardless of a one-trillion dollar bailout announced less than a week ago. As long as the EuroCurrencyShares Euro Trust (NYSE:FXE) and Pound CurrencyShares British Pound Ster. Trst (NYSE:FXB) fall, the U.S. Dollar PowerShares DB US Dollar Index Bullish (NYSE:UUP) continues to soar.
The Dollar ripping higher is killing commodity plays. Not only has oil been crushed in the past two weeks but again today it is getting hammered. Exxon Mobil and Chevron are leading the drop. Other lesser known players are continuing to collapse lower. Steel stocks like United States Steel Corporation (NYSE:X) and AK Steel Holding Corporation (NYSE:AKS) are under pressure as well as copper player Southern Copper Corporation (NYSE:SCCO).
Bottom line is this, as the Dollar soars, it puts major pressure on commodities. This kills stocks like Exxon, U.S. Steel and Southern Copper. Adding insult to injury, continued major problems in Europe also will create a lower demand curve. Less demand means lower prices. This is why we are seeing such a dramatic drop in commodity prices. This two sided monster does not want to quit and will hurt commodities until both reverse.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
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