Stocks Fall on Stronger Dollar, Weak Techs

A bearish outlook on chipmakers from BofA Merrill Lynch sparked equity losses Thursday

By Will Andrews

U.S. stocks closed lower Thursday as a stronger dollar put downward pressure on equities and other riskier investments, including commodities. Additional downward pressure came from a Bank of America Merrill Lynch downgrade of chipmakers. Materials, energy, and industrial stocks were among the hardest hit.

Growing concerns about a possible "double-dip" recession were weighing on the market, according to S&P MarketScope.

On Thursday, the 30-stock Dow Jones industrial average was lower by 93.87 points, or 0.90%, at 10,332.44. The broad Standard & Poor's 500-stock index was down 14.90 points, or 1.34%, at 1,094.90. The tech-heavy Nasdaq composite index lost 36.32 points, or 1.66%, to 2,156.82.

On the New York Stock Exchange, 25 stocks were lower in price for every six that advanced. Breadth on the Nasdaq was 21-5 negative.

The tech sector was dented by a Bank of America Merrill Lynch downgrade on the growth outlook for the semiconductor sector, along with lowered outlooks for Intel (INTC) and Texas Instruments (TXN).

Meredith Whitney, the independent equity analyst who has no "buy" recommendations on U.S. banks, said valuations on lender stocks are too high and what "scares" her most is the government stepping away from buying mortgage-backed securities. "The banks are still grossly overvalued," Whitney said Thursday in an interview on Bloomberg Radio. "People are expecting something great to happen in 2010 and I think they are going to be severely disappointed."

Economic data Thursday was mixed. The Philadelphia Fed index rose to 16.7 in November, above economists' median forecast of 12.0, from 11.5 in October.

The U.S. index of leading economic indicators rose 0.3% in October, below the median forecast of 0.4%, marking a seventh consecutive monthly gain.

U.S. weekly initial jobless claims were unchanged at 505,000 while continuing claims fell 39,000 to 5,611,000.

Treasuries were mixed Thursday. The 10-year note was up at 100-05/32 for a yield of 3.330%, while the 30-year bond was flat at 101-9/32 for a yield of 4.302%.

The dollar index was up at 75.31.

December gold futures were up at $1,145.10 per ounce, reversing earlier losses.

December West Texas Intermediate crude oil futures were off at $77.65 per barrel.

European stocks finished lower Thursday. In London, the FTSE 100 index was off 1.39%.

The CAC 40 index in Paris fell 1.77%.

Germany's DAX index declined 1.48%.

Asian markets finished mixed Thursday. Japan's Nikkei 225 index slumped 1.32%. Sentiment was hurt by news Wednesday that Tokyo Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, announced plans to raise up to 1 trillion yen ($11.2 billion) through a public offering intended to shore up its capital base.

The Hang Seng index in Hong Kong fell 0.86%.

Shanghai's benchmark index rose 0.53%.

In company news Thursday, Sears Holdings (SHLD) reported a narrower than expected third-quarter loss of $127 million, vs. a loss of $146 million a year earlier.

Williams-Sonoma (WSM) posted third-quarter non-GAAP EPS of 16 cents, vs. a loss of 10 cents per share one year earlier, on a 1.7% rise in same-store sales and a 3.0% total sales drop. The company raised fourth-quarter sales and earnings guidance.

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