- The Washington Times - Monday, September 22, 2003

NEW YORK (AP) — Stocks slid yesterday after finance ministers from leading industrial nations called for more flexible currency rates, sparking a tumble in the dollar and investor fears of dampened foreign investment. The Dow Jones industrials lost 109 points.

“It’s a combination of profit-taking and weakness in the dollar that is concerning investors,” said Mike Kayes, chief investment officer at Eastover Capital in Charlotte, N.C. “If the dollar continues to fall, there is increasing risk that foreign investors will pull money out of U.S. stocks and bonds.”

The Dow closed down 109.41, or 1.1 percent, to 9,535.41, having risen 1.8 percent in the previous week. It was the biggest one-day drop since Aug. 5, when the blue-chip average declined 149.72 points.

The broader market also finished sharply lower. The Nasdaq Composite Index dropped 31.08, or 1.6 percent, to 1,874.62, after a weekly advance of 2.7 percent. The Standard & Poor’s 500 index fell 13.48, or 1.3 percent, to 1,022.82, having gained 1.7 percent. The Russell 2000 Index, which tracks smaller-company stocks, fell 6.55, or 1.3 percent, to 513.65.



During the weekend, ministers from the world’s eight largest industrial countries, or Group of 8, said market forces should determine currency exchange rates, statements that many interpreted as support for a weak dollar. The dollar and overseas markets immediately fell on the news.

Foreign countries dislike a weak dollar because it makes their exports less competitive in overseas markets. U.S. investors, meanwhile, worry that foreign investors will stay away from devalued U.S. markets.

Investors have sent stocks higher since mid-March on a spate of largely upbeat economic reports and earnings news. Some analysts wonder whether the market might be due for pullbacks, while others believe stocks can continue upward on growing investor optimism, particularly if third-quarter earnings are strong.

“I think the chances that earnings will continue to be pretty decent is out there,” Mr. Kayes said. “If earnings are solid, I think the market will do well through the rest of the year.”

Scott Wren, equity strategist for A.G. Edwards & Sons Inc., agreed, adding that he doubts the dollar’s weakness will pressure equity markets for an extended period.

“It’s a knee-jerk reaction,” Mr. Wren said of the declines yesterday. “We had a huge run here obviously, so investors are taking profits. … I think it’s a little early to get worried that foreigners will start dumping Treasuries.”

Financial companies were among the biggest losers from the weak dollar. Merrill Lynch & Co. Inc. fell 99 cents to $56.40, Goldman Sachs & Co. declined $1.07 to $92.66 and Morgan Stanley dropped $1.23 to $51.15.

Wal-Mart Stores Inc. declined $1.07 to $57.07 even though the world’s largest retailer said sales for the month are on track to be on the high end of forecasts despite disruptions from Hurricane Isabel.

Gainers included Motorola Inc., which rose 97 cents to $12.06, after Christopher Galvin resigned as chairman and chief executive.

Declining issues outnumbered advancers 5-to-2 on the New York Stock Exchange. Consolidated volume was light at 1.62 billion shares, compared with 1.89 billion traded Friday.

Overseas, Japan’s Nikkei stock average finished 4.2 percent lower. In Europe, France’s CAC-40 fell 2.7 percent, Britain’s FTSE 100 declined 0.7 percent and Germany’s DAX index dropped 3.4 percent.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2020 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.

 

Click to Read More and View Comments

Click to Hide