You are on page 1of 2

U.S.

Stocks Slip As Investors Reassess Recent Gains


By DONNA KARDOS YESALAVICH

NEW YORK—U.S. stocks declined Monday as investors questioned whether the market might
have overly priced in the Federal Reserve's stimulus plans in recent weeks, especially as worries
remain over the financial health of some euro-zone members.

The Dow Jones Industrial Average dropped 54 points, or 0.5%, to 11391. Boeing was the
measure's worst performer with a drop of 1.8%, after Aviation Week on Friday reported that the
company has told several of its early customers that delivery of the 787 Dreamliner will be
delayed by as long as 10 months.

McDonald's was also weak, off 0.3%. The fast-food giant's same-store sales rose 6.5% in
October from a year earlier, topping its own forecast and analysts' estimates, but investors were
disappointed by a 5.6% increase in U.S. comparable sales, which came in short of analysts'
forecast for a 6% gain.

The Nasdaq Composite shed 0.1% to 2578. The Standard & Poor's 500-stock index dropped
0.5% to 1220.

The declines came as the market digested the Dow's 2.9% climb last week that brought the
measure to highs not seen since prior to the September 2008 collapse of Lehman Brothers. The
measure is up about 14% from late August, with much of the rally fueled by expectations for the
Republican Party's win of control of the House of Representatives last week, and the Federal
Reserve's pledge to inject more money into the economy.

QE2 worries are replaced by renewed concerns over European sovereign debt, leading U.S.
stocks lower. Donna Kardos Yesalavich, Kathleen Madigan and George Stahl report.

But investors are now wondering whether the market may have overdone the impacts of the
election and stimulus move, dubbed by Wall Street as QE2.

There are questions of "did we go too far too fast," said Jim Meyer, chief investment officer at
Tower Bridge Advisors. "There's a lot of questioning over whether QE2 is going to do what it's
intended to do."

Meanwhile, concerns about the debt situation in Ireland, Portugal and Spain resurfaced. The euro
fell to $1.3935, compared with $1.4034 late Friday in New York, as funding costs grew for all
three countries while the costs to insure against their debt also rose. Amid the concerns, U.S.
shares of Bank of Ireland tumbled 6.6%.

Also hurting the euro, German industrial production unexpectedly fell in September from the
previous month as the economic recovery proceeded more moderately.
As the euro weakened, the dollar strengthened. The U.S. Dollar Index, tracking the U.S. currency
against a basket of six others, climbed 0.7%.

Traders kept a close eye on currencies as U.S. President Barack Obama, returning fire in a heated
exchange with Germany, added his voice to U.S. efforts to reduce massive German and Chinese
trade surpluses and increase pressure on China to let the value of its currency rise. Tensions have
flared between German and U.S. economic officials ahead of the summit of the Group of 20
industrial and developing nations, which begins Wednesday night in Seoul.

"It's not surprising," said Michael Church, president of Addison Capital. "Everyone wants to try
to export their way to growth and the dynamics of that are that that's impossible to happen, so
you're going to have some infighting here."

European Central Bank President Jean-Claude Trichet tried Monday to calm the argument over
foreign-exchange policies, dismissing suggestions that the world's major powers are deliberately
weakening their currencies. He said central banks across the world "share a common purpose" in
keeping inflation expectations anchored, despite the differing challenges they face in their
respective countries.

Demand for Treasurys fell, lifting the yield on the 10-year note up to 2.54%. Crude-oil futures
slipped, as did gold futures.

Among stocks in focus, Yahoo climbed 0.9% following a Wall Street Journal article saying AOL
has hired financial advisers to explore various strategic options for the Internet company, one of
which includes a possible tie-up with bigger rival Yahoo. AOL added 1.4%.

http://online.wsj.com/article/SB10001424052748703514904575602073820860004.html?
mod=WSJ_Markets_LEFTTopNewsInt

You might also like