Stocks End Lower as Fears of Falling Dollar

Stocks end low Monday, November 29, 2004 as investors worried that the weakening dollar would establish inflation and hurt the overall economy. This concern also affect the holiday shopping season.

Declining issues are a lot, which contains 1.79 billion shares that increased from 631 million in Friday's holiday-shortened session. There are more than the advancers by nearly 5 to 4 on the New York Stock Exchange

I know that dollar has been dropping for several months. But the weakening dollar was actually helped the export, which was good for the domestic products. Therefore, stocks were rising in the past couple of months. But now it started declining during the holiday period. Why that happened? There’s something that I don’t understand, I think the dropping dollar might helped the export, and the foreign investors might invest more, or buy more US stock. That kind of trade should help the stock market as what it was like in past a few months. I think there might be many other reasons for the declining stock market; and what the news says make sense to me that people didn’t consume that much for this holiday as what the retailers expected because of the fear of the inflation.

The fact is that the retail stocks were lower even the holiday shopping increased the sales for most of the retailers over the thanksgiving weekend. Wal-Mart Stores Inc. said that its sales were lower than expected. As well as Target Corp. dropped 31 cents to $51.90, J.C. Penney & Co. dropped 65 cents to $39.91, Sears Roebuck & Co. dropped $1.88 to $52.42, and Kmart Holding Corp. fell $5.38 to $102.01.

According to preliminary calculations, the Dow Jones industrial average fell 46.33 or 0.44 percent, to 10,475.90. And it had been down more than 105 points earlier in the session. Moreover, the government bond also dropped according to the sell off on Wall Street. That’s because of the fears of foreign bondholders that giving up. Treasury bills as the dollar continue to dropping. Ten-year treasury notes fell 71.875 cents to $99.34375, along with the yield rising from 4.23 percent to 4.33 percent. And the Fed is expected to raise the benchmark interest rate to 2.25 percent.

In contrast, the sales of electronics kept tech stocks slightly higher for the session. Apple Computer Inc. raised $3.89, or 6.03 percent, to $68.44 after Merrill Lynch analysts said that holiday sales of its iPod music player would give the computer and electronics company a strong boost. Merrill Lynch raised its price target on Apple from $66 to $77per share. IBM Corp. and Sony Corp. have worked together on a new semiconductor specifically designed for home entertainment products with limited production. IBM raised 78 cents to $95.50, as well as Sony raised 40 cents to $36.37.

For the oversea issue, the stocks are generally raising as the dollar is weakening. Japan's Nikkei stock average raised 1.33 percent. In Europe, Britain's FTSE 100 closed up 0.18 percent, France's CAC-40 slipped 0.04 percent for the session, and Germany's DAX index fell 0.18 percent.