NEW YORK (Reuters) – U.S. stocks fell on Wednesday, hit by a strengthening dollar and new worries about European sovereign debt.
The dollar jumped against the euro after Ireland’s central bank decided to take a closer look at residential mortgages as concern mounted about the country’s finances. The dollar and equities have traded in an inverse relationship recently.
Stocks and other riskier assets have turned volatile in recent sessions in a market ripe for profit-taking. The biggest negatives were sudden declines in the euro and in metal prices as well as a late-day sell-off in the Treasury market.
Chad Morganlander, portfolio manager at Stifel Nicolaus & Co in Florham Park, New Jersey, said concerns about the implications of the U.S. Federal Reserve’s decision to buy more mortgage bonds was replacing the euphoria that has lifted the S&P 500 by 16 percent over the last two months.
«The initial liquidity rush of the last three months has seemed to have reached its crescendo,» Morganlander said. «Investor sentiment around the actions of the Fed have seem to have grown remorseful.»
The Dow Jones industrial average (.DJI) dropped 59.87 points, or 0.53 percent, to 11,286.88. The Standard & Poor’s 500 Index (.SPX) fell 5.70 points, or 0.47 percent, to 1,207.70. The Nasdaq Composite Index (.IXIC) lost 11.28 points, or 0.44 percent, to 2,551.70.
The S&P material index (.GSPM) was off 0.6 percent and among the worst-performing sectors.
The S&P 500 is at overbought levels, according to technical indicators. Its relative strength index topped the 80 level, the upper end of the scale. The index is also running into resistance at around 1,228, the closely followed Fibonacci 61.8 percent retracement of the decline between highs in 2007 and a 12-year low in March 2009.
In corporate news, Polo Ralph Lauren Corp (RL.N) reported better-than-expected quarterly profit and again raised its sales outlook, sending its stock up 7.8 percent to $108.79.
Shares of slot machine maker International Game Technology (IGT.N) dropped 2.5 percent to $15.92 after profits missed estimates as demand from casinos stayed weak.
Boeing Co (BA.N) halted test flights of its long-delayed 787 Dreamliner on Wednesday, one day after smoke in the main cabin of one of the planes forced an emergency landing in Texas. Boeing dropped 3.1 percent to $67.11.
Investors ignored upbeat economic data showing a bigger-than-expected fall in jobless claims one week after the government said employment surged in October.
(Reporting by Edward Krudy; editing by Jeffrey Benkoe)