Stocks mostly fall as the dollar's slide eases

NEW YORK – Investors cooled their buying of stocks and commodities, pausing from a surge that's carried major stock indexes to their highest levels in more than a year.

Stocks mostly fell in quiet trading Tuesday, a day after the Dow Jones industrials shot up 200 points for the second time in three days. The stock market again took its cue from the dollar, as it has for months. It drove higher Monday as the dollar weakened and slipped Tuesday as the currency rose.

The Dow swung in a range of about 60 points as investors increased their buying of safe-haven assets like the dollar and Treasurys. The ICE Futures US dollar index, which measures the dollar against other currencies, rose 0.2 percent.

"People are reaching for a little less risk today after we've had such a run," said Bill Stone, chief investment strategist at PNC Wealth Management.

Record-low interest rates in the U.S. and the resulting slide in the dollar have been major forces behind the surge in stocks in recent months. A weaker dollar allows investors to borrow money cheaply, while the low interest rates also encourage them to hold any assets other than low-yielding cash, such as stocks, commodities and bonds.

The falling dollar has enabled many investors to look past some of the economy's persistent trouble spots, including unemployment. The jobless rate rose to 10.2 percent in October, the highest level in 26 years.

A number of market watchers still believe the recent surge in stocks has been overdone given the weaknesses that remain in the economy, such as the large amounts of souring loans on banks' balance sheets.

In midafternoon trading, the Dow rose 2.57, or less than 0.1 percent, to 10,229.51. On Monday the Dow closed at its highest level since October 2008.

The broader Standard & Poor's 500 index fell 1.40, or 0.1 percent, to 1,091.68, while the Nasdaq composite index fell 5.41, or 0.3 percent, to 2,148.65.

Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 649.1 million shares, compared with 679.3 million at the same point Monday.

Bond prices rose, sending yields down, after an auction of 10-year notes drew solid demand. The 10-year yield fell to 3.48 percent from 3.49 percent late Monday.

In corporate news, bond insurer MBIA Inc. tumbled $1.13, or 23.5 percent, to $3.67 after posting a third-quarter loss on weaker results at its insurance business.

American International Group Inc. rose after analysts at Moody's Investor Service projected that the insurer will have adequate resources to repay the federal government. The government has injected more than $182 billion in aid to the company to help stabilize the financial system. The government holds an 80 percent stake in the company. AIG rose $1.99, or 5.5 percent, to $38.17.

Priceline.com Inc. jumped to a nine-year high after the online travel booking company said it was seeing an increase in customers booking airfare and hotel rooms. The stock rose $29.91, or 17.2 percent, to $203.64 after trading as high as $207.92.

Beazer Homes USA rose after the homebuilder turned a fiscal fourth-quarter profit despite a plunge in revenue and said it saw "some moderation" in weak market trends. The stock rose 39 cents, or 8.3 percent, to $5.08.

Fluor Corp. fell $3.54, or 7.4 percent, to $44.47 after the engineering and construction company posted an 11 percent drop in its third-quarter profit as revenue fell at its oil and gas and power divisions.

Crude oil fell 72 cents to $78.71 per barrel on the New York Mercantile Exchange, while gold rose.

In other trading, the Russell 2000 index of smaller companies fell 6.63, or 1.1 percent, to 585.68.

Overseas, Britain's FTSE and Germany's DAX index each fell 0.1 percent. France's CAC-40 was essentially flat. Japan's Nikkei stock average rose 0.6 percent.