The Egyptian military announced on national television that it has stepped in to "safeguard the country" and that Mubarak would meet the demands of protesters. There were also early unconfirmed reports that vice president Omar Suleiman may take over.
The dollar was firmer already today, and it held its gains after the news. The dollar index was up 0.55 at 78.19, and the greenback was gaining against the euro, which was at 136.03 .
Brown Brothers Harriman currency strategist Win Thin said the market takes it as "more of the same" and that investors are waiting to see a credible election plan.
"If they do get some really possible solution, I think the dollar would weaken ... There's a safe haven bid there today," he said. Uncertainty about Egypt and renewed concerns about peripheral European sovereign debt issues sent buyers into the dollar, he said.
Stocks erased some losses on the news, but stayed lower on the day in morning trading. The S&P 500 had hit a low of 1311 earlier in the morning. Cisco was a big negative, down about 12 percent on disappointing earnings news.
"I think the market cares a little bit, but there are still concerns about when it's going to happen ... There's nervousness that Mubarak's going to say he's going to step down, but he might be staying in the back seat for awhile," said Patrick Boyle of FBR.
Boyle said stocks were reacting to European debt concerns, but traders are also watching the bond market. Treasury prices were lower, as bonds failed to hold a bid, even with elevated sovereign concerns. "There's too much momentum on the upside for this market to really pull back," he said of stocks.
Oil was trading slightly higher before and after the news.
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