Dollar: It will only get worse

Greenback likely to stay under pressure in near term but find relied by mid-year, currency experts argue.

Brutal selloff on Wall Street

Dow tumbles 315 points, the second worst day of the year for stocks, after AIG's big loss and UBS's outlook on financials.

• The dollar held near a record low versus the euro.

• Oil prices dipped after topping all-time highs over $103 a barrel during the session. Gold prices jumped too.

• AIG (AIG, Fortune 500) reported a steep $5.3 billion quarterly loss after the market close Thursday and said it took an $11 billion writedown related to big losses in investments tied to bad mortgage bets. Shares of the Dow component tumbled 7% Friday.

• Brokerage UBS said financial firms could end up facing $600 billion in losses as the credit crisis continues to unfold. Banks, brokers and insurers have already lost more than $160 billion related to bad mortgage bets. UBS also cut its first-quarter earnings estimates on a number of investment banks.

• "We got some horrible news today with UBS and AIG, then you also have Dell, oil, everything else, and this market is just looking to sell off," said Greg Church, president at Church Capital.

• Economic news mostly negative. The Chicago PMI, a report on manufacturing in the Midwest, fell more than expected, sliding to 44.5 in February from 51.5 in the previous month, marking a more than six-year low. Economists thought it would fall to 49.5. Any number below 50 indicates weakness in the sector.

• The University of Michigan's consumer sentiment index was revised up slightly to 70.8 in February from an earlier read of 69.6, the lowest level since the early 1990s. Sentiment stood at 78 in January.

• Both personal income and personal spending rose more than expected in January, the Commerce Department reported. But the report pointed to signs of inflation pressure.

• Income rose 0.3% after gaining 0.5% in December. Economists surveyed by Briefing.com thought income would rise 0.2%. Spending grew 0.4% after gaining 0.3% in December, versus expectations for a rise of 0.2%.

• Core PCE, the report's inflation component, grew 0.3%, as expected, after rising 0.2% in December. But the measure, which tracks prices paid by consumers for goods other than food and energy, jumped 2.2% versus a year earlier. That's above the 1% to 2% range for that indicator that the Federal Reserve is said to prefer.

• Eye on the Fed. The Fed has cut interest rates steadily since September, leaving the fed funds rate, a key bank lending rate, at 3%. Wall Streeters expect the bank to cut rates by another half-percentage point at the upcoming meeting on March 18.

• However, in recent congressional testimony, Fed Chairman Ben Bernanke indicated that rising inflation was making it harder for the Fed to continue cutting rates to stimulate the sluggish economy.

• Elsewhere in the financial sector, MF Global (MF) slumped 18% in active trade, falling for a second session after admitting it lost $141.5 million after a rogue trader made unauthorized bets. Goldman Sachs, Credit Suisse and UBS all downgraded the stock and Moody's and S&P cut their ratings on the company's debt Friday.

• Market breadth was negative. On the New York Stock Exchange, losers topped winners six to one on volume of 1.26 billion shares. On the Nasdaq, decliners topped advancers three to one on volume of 2.04 billion shares.

• The dollar touched a fresh all-time low versus the euro before recovering a bit. The greenback hit a three-year low against the yen.