Stocks hurt by dollar
gains, building drop
NEW YORK >> A drop in housing starts and a rally in the U.S. dollar on currency markets sent stocks lower yesterday as the news gave investors an incentive to collect profits.
Rough winter weather was to blame for the 7.9 percent drop in residential building construction last month from December levels, the largest tumble in a year. However, the pace of residential construction in January was up 4.1 percent from the same month a year ago, giving investors a little good news to go with the bad.
In addition, gains by the dollar, coming off all-time lows against the euro, sank large-cap stocks that had benefited from the low dollar in overseas sales.
"Large-caps will take the hit for the dollar rising," said Michael Sheldon, chief market strategist at Spencer Clarke LLC. "That's sparked the selling you're seeing here."
The Dow Jones industrial average fell 42.89, or 0.40 percent, to 10,671.99.
Broader stock indicators also fell. The Standard & Poor's 500 index was down 5.17, or 0.45 percent, at 1,151.82, and the Nasdaq composite index lost 3.88, or 0.2 percent, to 2,076.47.
The price of the Treasury's 10-year note closed down 1/16 point, while its yield rose to 4.05 percent from 4.04 percent Tuesday. Two-year Treasury notes were off 1/32 point and yielded 1.68 percent, up from 1.67 percent Tuesday.
The disappointing construction data did little to convince investors that the economic recovery was stable.
"There's still a lot of uncertainty," said Bill Groenveld, head trader for vFinance Investments. "Our whole set of economic numbers over the past few weeks have been like a choppy graph -- up and down, up and down. What do you believe? That's the question."
Technology stocks fended off some selling on the strength of Rambus Inc., after a federal court dismissed antitrust charges against the computer chip maker. Rambus shot up $9.09, or 35 percent, to $34.93.
Wireless stocks held investors' attention after the $41 billion merger deal between AT&T Wireless Services Inc. and Cingular Wireless. Nextel Communications, considered another prime takeover target in the wireless industry, fell 15 cents to $28.62. AT&T Wireless slipped 6 cents to $13.72.
The Walt Disney Co. fell 19 cents to $26.71 one day after rejecting Comcast Corp.'s $54 billion takeover bid. Disney also announced it had acquired the rights to the Muppets characters from The Jim Henson Co.
Metro-Goldwyn-Mayer Inc. posted better-than-expected earnings of 25 cents per share. The film and television producer edged up 30 cents to $17.42. Hamburger chain Jack in the Box Inc. rose $1.45 to $25.85 after posting a 26 percent decline in profits. The company beat Wall Street expectations by 5 cents per share.
LaBranche & Co. rose 18 cents to $11.08 and Van Der Moolen Holdings NV climbed 11 cents to $9.41.