U.S. stocks were recording their steepest fall in three weeks in midday trading on Tuesday, as a host of positive economic data increased the likelihood of a rate hike in the near term and sent the dollar soaring.
The dollar was hovering at a one-month peak against a basket of major currencies .DXY and at one point gained as much as 1.38 percent, pushing for its largest daily move in almost two years.
“A strong dollar is going to hurt exports and the revenue line of companies, which wasn’t strong to begin with,” said Rick Fier, director of trading at Conifer Securities in New York.
The overall economy is gradually firming, with reports on Tuesday showing business investment spending plans increasing solidly in April, consumer confidence perking up this month and house prices extending gains in March.
The buoyant data comes after Federal Reserve Chair Janet Yellen said on Friday that the central bank could raise interest rates this year if the economy keeps improving as expected. The comments kept the prospects of a September rate increase high.
Yellen’s comments and the dollar’s rise have pushed the monthly gain for each of the three major U.S. stock indexes to below 2 percent in the past two trading sessions.
At 12:19 p.m. ET (1619 GMT) the Dow Jones industrial average .DJI was down 175.9 points, or 0.96 percent, at 18,056.12. All 30 Dow components were in the red, with IBM’s (IBM.N) 1.3 percent fall to $170 weighing the most.
The Nasdaq Composite .IXIC was down 54.69 points, or 1.07 percent, at 5,034.67 and the S&P 500 .SPX was down 19.52 points, or 0.92 percent, at 2,106.54.
All 10 major S&P 500 sectors were lower, with the energy index’s .SPLRCM 1.39 percent the biggest decline as oil prices fell 2 percent partly due to the dollar’s rally.
Apple (AAPL.O) fell 1.5 percent to $130.61 and was the biggest drag on the S&P 500 and the Nasdaq.
Charter Communications’ (CHTR.O) shares were up 1.9 percent at $178.68 after it agreed to buy Time Warner Cable (TWC.N) for $55.8 billion. Time Warner Cable rose 6 percent to $181.62, well below Charter’s cash and stock offer of $195.71.
First Solar (FSLR.O) fell 6.7 percent, the biggest on the S&P, to $51.40 after RBC downgraded the solar panel maker’s stock to “underperform” from “sector perform”.
LivePerson (LPSN.O) jumped 14 percent at $10.20 after an Israeli website reported software provider Nice Systems (NICE.O) was in talks to acquire the chat software firm. Nice was down 3.7 percent at $62.67.
Read more: U.S. stocks off sharply as dollar rallies