Stocks edge lower as dollar rises to one-year high

By Chibuike Oguh

NEW YORK, June 24 (Reuters) - Stocks fell on Wednesday, erasing early Wall Street gains and leaving European shares little changed, as valuation worries continued to weigh on sentiment, while the dollar climbed to a one-year high.

On Wall Street, the benchmark S&P 500 and the Nasdaq ended lower while the Dow gained. Consumer discretionary, industrials and utilities stocks drove gains. Energy stocks were the biggest losers as the continued flow of crude oil through the Strait of Hormuz pushed prices toward four-month lows.

Technology stocks reversed early gains and continued their descent following a selloff on Tuesday. Sentiment has been fragile as investors priced in at least one rate hike from the Federal Reserve this year.

The Dow Jones Industrial Average rose 0.35%, the S&P 500 fell 0.1%, and the Nasdaq Composite fell 0.43%.

Brandon Pizzurro, chief investment officer at GuideStone, said there was some rotation in the market following the rush into AI-related stocks. "It's a pause to reflect on how fast we've come in recent weeks."

MSCI's gauge of stocks across the globe fell 0.16%.

In Europe, the broader regional stock market index finished roughly unchanged on the day. A 15% drop in shares of defense company Rheinmetall, after media reports that the German government was planning to scrap a delayed multibillion-euro frigate project, was partly offset by gains in a smattering of heavyweight luxury and tech stocks.

"We're probably approaching peak hawkishness in terms of interpreting the Fed's new stance and it looks like that's what's primarily driving asset prices," said Wasif Latif, chief investment officer at Sarmaya Partners.

STRAIT OF HORMUZ

Crude oil prices fell, extending this week's losses and trading near four-month lows, on signs that more tankers stranded in the Gulf are set to move out of the Strait of Hormuz.

There is a good deal of uncertainty about the outlook, with the U.S. and Iran providing conflicting accounts about what the two countries have agreed to in their peace deal, including key elements such as nuclear inspections and control of the strait.

Brent fell to $73.74 per barrel to settle down 4.33% on the day.

DOLLAR JUMPS

The U.S. dollar rose for a third straight day against a basket of major currencies to its highest in a year, as markets anticipate Fed rate hikes.

The euro was one of the main victims of dollar strength, as investors lowered their expectations for the European Central Bank to raise rates much more this year, while pricing in a greater chance that the Fed will lift borrowing costs.

The euro was trading around its lowest in a year, down for a third day at $1.1357. 

The yen was also weaker on the day, trading around 161.81, keeping markets on edge over potential currency intervention to prop up the battered Japanese currency.

The dollar index rose 0.19% to 101.58, hitting its highest level since May 2025.

Gold prices fell to a more than seven-month low under pressure from a firmer U.S. dollar.

Spot gold fell 2.69% to $3,997.69 an ounce.

(Reporting by Chibuike Oguh in New York; Additional reporting by Satoshi Sugiyama in Tokyo; Editing by Lincoln Feast, Nia Williams, Aurora Ellis and Edmund Klamann)