Tulsa World: Stocks: Zigzag after rally as the dollar rises

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Stocks: Zigzag after rally as the dollar rises

By SARA LEPRO and TIM PARADIS AP Business Writers
Published: 11/10/2009 6:47 AM
Last Modified: 11/10/2009 3:46 PM

NEW YORK — Investors cooled their buying of stocks and commodities, pausing from a surge that carried major stock indexes to their highest levels in more than a year.

Stocks ended mixed Tuesday. The Dow Jones industrials tacked on 20 points a day after shooting up 200 points for the second time in three days.

The market again took its direction from the dollar, as it has for months. Stocks drove higher Monday as the dollar weakened and slipped Tuesday as the currency rose.

The Dow swung in a range of about 60 points in light trading as investors increased their buying of safe-haven assets like the dollar and Treasurys. The ICE Futures US dollar index, which measures the dollar against other currencies, edged higher.

"People are reaching for a little less risk today after we've had such a run," said Bill Stone, chief investment strategist at PNC Wealth Management.

Record-low interest rates in the U.S. and the resulting slide in the dollar have been major forces behind the surge in stocks in recent months. A weaker dollar allows investors to borrow money cheaply, while the low interest rates also encourage them to hold any assets other than low-yielding cash, such as stocks, commodities and bonds.

The falling dollar has enabled many investors to look past some of the economy's persistent trouble spots, including unemployment. The jobless rate rose to 10.2 percent in October, the highest level in 26 years.

A number of market watchers still believe the recent surge in stocks

has been overdone given the weaknesses that remain in the economy, such as the large amounts of souring loans on banks' balance sheets.

Still, some analysts said the market's ability to hold its gains is a welcome sign.

Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said it is encouraging that the market is holding its gains and isn't as volatile as last month when big advances would be followed by big drops. He said a day of modest moves is a healthful sign of a market consolidating its gains.

"It's kind of what you call a coffee day," he said, referring to the market's small moves. "We expect that we'll continue to stair-step higher to the end of the year."

According to preliminary calculations, the Dow rose 20.03, or 0.2 percent, to 10,246.97, its fourth straight advance and its highest close since Oct. 3, 2008. The Dow traded up to 10,260.80, a 12-month.

The broader Standard & Poor's 500 index fell 0.07, or less than 0.1 percent, to 1,093.01, after six straight days of gains. The Nasdaq composite index fell 2.98, or 0.1 percent, to 2,151.08.

Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 1.1 billion shares, compared with 1.2 billion Monday.

Bond prices mostly rose, sending yields down, after an auction of 10-year notes drew decent demand. The 10-year yield fell to 3.48 percent from 3.49 percent late Monday.

In corporate news, bond insurer MBIA Inc. tumbled $1.28, or 26.7 percent, to $3.52 after posting a third-quarter loss on weaker results at its insurance business.

American International Group Inc. rose after analysts at Moody's Investor Service projected that the insurer will have adequate resources to repay the federal government. The government has injected more than $182 billion in aid to the company to help stabilize the financial system. AIG rose $1.41, or 3.9 percent, to $37.59.

Priceline.com Inc. jumped to a nine-year high after the online travel booking company said it was seeing an increase in customers booking airfare and hotel rooms. The stock rose $30.49, or 17.6 percent, to $204.22 after trading as high as $209.19.

Beazer Homes USA rose after the homebuilder turned a fiscal fourth-quarter profit despite a plunge in revenue and said it saw "some moderation" in weak market trends. The stock rose 41 cents, or 8.7 percent, to $5.10.

Fluor Corp. fell $3.63, or 7.6 percent, to $44.38 after the engineering and construction company posted an 11 percent drop in its third-quarter profit as revenue fell at its oil and gas and power divisions.

Crude oil fell 38 cents to settle at $79.05 per barrel on the New York Mercantile Exchange, while gold rose.

In other trading, the Russell 2000 index of smaller companies fell 5.34, or 0.9 percent, to 586.97.

Overseas, Britain's FTSE and Germany's DAX index each fell 0.1 percent. France's CAC-40 was essentially flat. Japan's Nikkei stock average rose 0.6 percent.

By SARA LEPRO and TIM PARADIS AP Business Writers

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SS_Hippy, Tulsa (11/10/2009 7:25:38 AM)

first the experts said the market would crash in September, then October.

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