CNBC’s Jim Cramer credited the drop in the US dollar as helping stocks close higher on Tuesday.
“It’s time to realize that the dollar is dominating. Today, at least the dollar rally has paused, which means the bears have also taken a break. If the dollar continues to pull back, maybe they will hibernate,” he said. aforementioned.
Stocks rose for the third consecutive session on Tuesday, supported in part by a drop in bond yields and a weaker dollar.
The value of the US dollar has soared in recent months, driven by the Federal Reserve’s rate hike campaign and the strong US economy.
The strength of the dollar has hurt companies operating overseas as their balance sheets are subject to unfavorable exchange rates.
At the same time, Cramer said, “bond yields reflect whether Wall Street expects more pain from the Fed, so it’s very good when these two things go down.”
He added that the dollar is likely to decline, according to chart analysis by Carley Garner of DeCarley Trading. While the central bank may be looking for slow gains in December, Cramer said it remains unclear whether the market’s recent strength will continue, according to a report in The Wall Street Journal.
“The market needs time to adjust and the Fed doesn’t want to rock the boat too aggressively just before the drop. [midterm] choice,” he said.