Newspaper article THE JOURNAL RECORD

Inflation Fears, Falling Dollar Weakens Stocks

Newspaper article THE JOURNAL RECORD

Inflation Fears, Falling Dollar Weakens Stocks

Article excerpt

NEW YORK (AP) _ Stocks weakened Thursday, hurt by a sharply lower dollar and renewed jitters about inflation.

The Dow Jones average of 30 industrial stocks fell 14.87 to 3,979.93, closing below 4,000 for the second time this week. The Dow was led lower by economically sensitive stocks, as investors sold issues they believed would lose value if interest rates rose.

Declining issues led advancers by about 6 to 5 on the New York Stock Exchange. Big Board volume totaled 329.43 million shares as of 4 p.m., down from 362.56 million on Wednesday.

Broad market indexes were mixed, with Nasdaq and American Stock Exchange shares taking support from technology issues.

The Nasdaq composite index rose 1.81 to 793.68. The American Stock Exchange's market value index climbed 2.32 to 453.06.

But the NYSE's composite index fell 0.40 to 263.36, while the Standard Poor's 500-stock index fell 0.52 to 485.13.

The dollar slid to an all-time low against the Japanese yen and the lowest rate against the German mark since October 1992. The dollar was trading late in the day at 1.44 marks, down 2 pfennigs, and at 95.34 yen, down 1.54 yen.

The currency's rout sent bond prices skidding, with the 30-year Treasury down about point late in the session, pushing interest rates higher. Stocks fell along with bond prices.

Stocks bounced off the day's bottom after the Treasury intervened to support the dollar, but still ended the day lower.

Stocks rose to record highs last week as investors hoped that the Federal Reserve may be finished raising rates for the time being. But analysts warned on Thursday that if the dollar does not recover, the Fed may be forced to tighten further to protect the currency. Higher rates can send stock prices lower.

In addition, the weak currency has pulled global investment money out of the United States and dollar-denominated securities, including stocks, and into European securities, said Leon Brand, global investment strategist at Natwest Securities. …

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