Stocks Fall as Dollar Strengthens      11/20 18:46

   Investors can't shake their fears that the economy isn't keeping up with the 
stock market.

   NEW YORK (AP) -- Investors can't shake their fears that the economy isn't 
keeping up with the stock market.

   Stocks fell for a third straight day Friday as a disappointing outlook from 
computer maker Dell Inc. suggested that an economic recovery could be uneven. 
The major indexes all had moderate losses, leaving the Dow Jones industrials 
with a slim 0.5 percent weekly gain while broader indexes slid.

   The market, which has been shuttling between concerns about the economy and 
traders' need to find high-yielding investments, is back to worrying about the 
economy. Demand for safe haven investments like Treasurys and the dollar rose 
for a second day in response to Dell's outlook and comments from European 
Central Bank President Jean-Claude Trichet, who said the ECB plans to start 
reining in some of its stimulus programs. A rising dollar also hit commodities 
producers and exporters.

   The week's trading saw investors, who have been pumping money into stocks 
because record-low interest rates mean paltry returns for the dollar and 
Treasurys, change that strategy. Many are now questioning whether the massive 
stock rally this year really has been justified given the soft spots in the 
economy, and so they've been quick to retreat to safe harbors like government 
debt and the greenback.

   The yield on the three-month T-bill, which moves opposite its price, fell to 
0.01 percent from 0.02 percent late Thursday. Yields briefly turned negative 
Thursday as investors seeking to pad their portfolios with safe investments 
before the end of the year were willing to accept negative returns.

   "Investors seem to need a constant reassurance with where we are in the 
economic recovery," said Brett D'Arcy, chief investment officer at CBIZ Wealth 
Management Group in San Diego. "We just haven't gotten it in the past few days."

   Instead, investors got the type of downcast news from Dell that suggests a 
recovery could be uneven. The company said sales of its computers to big 
businesses remain sluggish. Its quarterly revenue and profit missed analysts' 
expectations.

   The Dow slipped 14.28, or 0.1 percent, to 10,318.16. The Dow fell 119 
points, or 1.1 percent, in the final three days of the week. It ended the week 
up 0.5 percent because of steep gains Monday following an improvement in retail 
sales.

   The broader Standard & Poor's 500 index fell 3.52, or 0.3 percent, to 
1,091.38, while the Nasdaq composite index, dominated by tech stocks like Dell, 
fell 10.78, or 0.5 percent, to 2,146.04.

   For the week, the S&P 500 index fell 0.2 percent and the Nasdaq lost 1 
percent. For November, those indexes are each up about 5 percent, while the Dow 
is up about 6 percent.

   The ICE Futures US dollar index, which measures the dollar against other 
major currencies, rose 0.4 percent. The stronger dollar can hurt commodities 
prices and sales of U.S. exporters, whose goods become more expensive overseas 
when the dollar rises.

   Demand for longer-term Treasurys fell, pushing yields higher. The yield on 
the benchmark 10-year note rose to 3.37 percent from 3.34 percent.

   Many of the week's economic numbers made investors cautious. Reports 
Wednesday and Thursday showing a drop in housing starts and a jump in mortgage 
delinquencies upended an advance that had been all but unbroken in November. 
Those figures brought worries that an economic recovery will be slow and bumpy.

   Concerns about the pace of a recovery have dogged the market's eight-month 
rally but with the nation's unemployment rate now above 10 percent for the 
first time in 26 years and new worries about housing, some analysts say 
investors have raced too far ahead of a recovery in the economy.

   Many investors have amassed big gains in the climb since March that has left 
the S&P 500 index up 20.8 percent so far this year. Analysts say volume has 
fallen in November because some money managers are stepping away from the 
market to safeguard their gains.

   Traders predict volume will be light again next week because of 
Thanksgiving. Even with the holiday, the week brings a flurry of reports on 
home sales, unemployment, consumer confidence and demand for big-ticket 
manufactured goods.

   The government also will revise its early estimate that said the economy 
grew at an annual pace of 3.5 percent during the July-September quarter. Many 
analysts now expect gross domestic product will be revised lower because of 
recent reports on housing and retail sales.

   Hank Smith, chief investment officer of equity at Haverford Investments in 
Radnor, Pa., said investors are worried that a lower reading on GDP will mean 
the economy didn't start the final quarter of 2009 with as much strength as had 
been hoped.

   Smith said the market's slump after its peak Tuesday wasn't unexpected 
because of the steep gains of the first half of the month. He predicts the 
latest slide and others won't be deep because some investors who didn't take 
part in the market's eight-month rally are looking for opportunities to jump in.

   "The investors who have missed this move are experiencing tremendous anxiety 
about missing a new bull market but also about getting paid nothing or, in some 
cases, negative returns," Smith said.

   Dell fell $1.58, or 10 percent, to $14.29.

   Energy companies logged some of the biggest drops as crude oil fell 74 cents 
to settle at $76.72 per barrel on the New York Mercantile Exchange as the 
dollar rose. Gold rose.

   Three stocks fell for every two that rose on the New York Stock Exchange, 
where consolidated volume came to 3.8 billion shares compared with 4.3 billion 
shares Thursday.

   The Russell 2000 index of smaller companies fell 1.00, or 0.2 percent, to 
584.68.

   Overseas, Britain's FTSE 100 fell 0.3 percent, Germany's DAX index lost 0.7 
percent, and France's CAC-40 dropped 0.8 percent. Japan's Nikkei stock average 
fell 0.5 percent.

   The Dow Jones industrial average closed the week up 47.69, or 0.5 percent, 
at 10,318.16. The Standard & Poor's 500 index fell 2.10, or 0.2 percent, to 
1,091.38. The Nasdaq composite index fell 21.84, or 1 percent, to 2,146.04.

   The Russell 2000 index, which tracks the performance of small company 
stocks, fell 1.60, or 0.3 percent, for the week to 584.68.

   The Dow Jones U.S. Total Stock Market Index -- which measures nearly all 
U.S.-based companies -- ended at 11,064.78, down 30.37, or 0.3 percent.


(KM)