Reports that Asian economies see little alternative to the dollar even if U.S. credit ratings are cut tripped big gains for the currency, rising 1.4 percent on the dollar index to 79.55. The gain in the dollar made for a rush of profit taking in commodities which for the last month have benefited from dollar weakness and resulting demand to hedge against inflation. Grains showed some of the deepest losses with wheat down 7 percent on the session. Silver fell 5 percent to $15.35 with gold down 3 percent to $962. Oil also fell 3 percent to end just below $66.50.
A run of soft economic data didn't help. ADP's count is pointing to another month of severe, but perhaps no more severe, job losses, as did ISM's non-manufacturing report that also showed a surprise decline in new orders, a sobering reminder that recovery is still well down the road. The S&P 500 fell 1.4 percent to 931.79. Demand for Treasuries rose with the 10-year yield down 7 basis points to 3.54 percent. In congressional testimony, Ben Bernanke played down the recent rise in long Treasury yields. He offered no surprises and no changes to the Fed's asset purchase plan.