Star-Bulletin news services
Weak dollar spurs
drop in market
NEW YORK >> Wall Street suffered its biggest decline in nearly two months today as investors grew nervous that a declining dollar would dampen foreign investment in the United States. The Dow Jones industrials slid 185 points.
Analysts said a U.S. Supreme Court ruling that could force drug manufacturers to lower prices in Maine also prompted investors to cash in profits after several weeks of gains. Light volume, meanwhile, accentuated price swings.
"The concern is that foreign investors could be selling U.S.-based holdings and going overseas with their investment capital," said Jim Russell, director of core equity strategy for Fifth-Third Bank in Cincinnati.
"We also think the market is down because it has had such a strong run-up post-war," he added. "The market is ready for a pause. ... We would expect a pullback of modest proportions over May and June."
The Dow closed down 185.58, or 2.1 percent, at 8,493.39, having gained 0.9 percent last week to post its third winning week. It was the biggest point decline since March 24, when the blue chips lost 307 points; still, the Dow was trading at levels seen a little more than a week ago.
The broader market also finished lower. The Nasdaq composite index fell 45.76, or 3 percent, to 1,492.77, also the biggest drop since March 24, when the index declined 52 points. That came after last week's advance of 1.2 percent, the index's fifth straight week of gains.
The Standard & Poor's 500 index dropped 23.53, or 2.5 percent, to 920.77, after rising 1.2 percent to also notch its fifth winning week. It was also the biggest one-day loss since March 24, when the index fell 31 points.
Declining issues outnumbered advancers 5 to 2 on the New York Stock Exchange. Volume was light.
The Russell 2000 index, a barometer of smaller company stocks, fell 6.37, or 1.5 percent, to 408.32.
The dollar slid to multiyear lows against the euro and the Japanese yen after U.S. Treasury Secretary John Snow over the weekend called the dollar's recent losses "fairly modest." He added that market fundamentals should determine the dollar's value.
Disappointing retail sales also weighed on stocks.
Lowe's dropped $4 to $40.30 after the nation's second-largest home improvement chain reported first-quarter earnings that beat analysts' expectations by a penny; however, its same-store sales fell below the company's estimates.
Home Depot, Lowe's rival and a Dow component, also fell on the news, dropping $1.12 to $28.07; the company reports its quarterly earnings Tuesday.
"Lowe's has appreciated very rapidly in the last couple of weeks in anticipation of a good earnings number," Russell said.
Overseas, Japan's Nikkei stock average finished 1 percent lower Monday. In Europe, France's CAC-40 dropped 4.3 percent, Britain's FTSE 100 fell 2.7 percent and Germany's DAX index slid 4.6 percent.
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