Global stocks rally falters as dollar slips

By Herbert Lash

NEW YORK (BestGrowthStock) – A stock rally fizzled on Wall Street on Monday as investors took profits and the dollar fell after Moody’s warned it may change its U.S. outlook if a tax-cut deal is adopted.

Strong Chinese economic data lifted commodity prices, with copper prices setting a record high and crude oil surging before meeting resistance above $89 a barrel on concern about further anti-inflation measures by China.

The broad S&P 500 index closed flat and the Dow ended just above break-even as optimism faded over China’s move to tame inflation and on concerns about a 5.1 percent run-up in the S&P so far in December.

The benchmark S&P 500 has gained 5.1 percent so far in December.

“We’ve had a decent run-up over the last week or so and the market started out strong, but we saw a bit of profit-taking at the end,” said Giri Cherukuri, head trader at Oakbrook Investments LLC in Lisle, Illinois.

The Dow Jones industrial average (.DJI: ) closed up 18.24 points, or 0.16 percent, at 11,428.56. The Standard & Poor’s 500 Index (.SPX: ) was barely up 0.06 point at 1,240.46. The Nasdaq Composite Index (.IXIC: ) was down 12.63 points, or 0.48 percent, at 2,624.91.

MSCI’s all-country world stock index (.MIWD00000PUS: ) rose 0.7 percent, and Japanese stock futures were higher in trading in Chicago.

The dollar slid after Moody’s said it could move a step closer to cutting the United States’ Aaa rating if President Barack Obama’s tax and unemployment benefit package becomes law.

The plan agreed to by Obama and Republican leaders last week could push up debt levels, the ratings agency said.

“This move is coming as the market starts to price in the impact of the tax cut deal,” said Paresh Upadhyaya, head of Americas G10 strategy at BofA Merrill Lynch.

“While Moody’s saying it increases the chances of a negative outlook on U.S. ratings isn’t new, traders can’t help but contemplate the ‘what if’ scenario,” Upadhaya said.

The dollar fell against major currencies, with the U.S. Dollar Index (.DXY: ) down 0.91 percent at 79.338.

The euro was up 1.20 percent at $1.3392, and against the yen, the dollar was down 0.60 percent at 83.41.

U.S. crude for January delivery rose 82 cents to settle at $88.61 a barrel. ICE Brent crude for January rose 71 cents to settle at $91.19 a barrel.

Gold rose toward $1,400 an ounce, with investors buying bullion as the dollar weakened, China kept interest rates steady and a U.S. tax cut extension loomed.

U.S. gold futures for December delivery settled up $13.10 an ounce at $1,398.

Prices of U.S. Treasuries rebounded after an earlier selloff sent yields to their highest levels in six months and brought buyers into the market.

The benchmark 10-year’s yield above 3.375 percent, seen as a key technical price support point, drew buyers.

The benchmark 10-year U.S. Treasury note was up 9/32, with the yield at 3.2865 percent.

(Reporting by Ryan Vlastelica, Nick Olivari, Robert Gibbons, Chris Reese and Frank Tang in New York; writing Herbert Lash; Editing by Kenneth Barry)

Global stocks rally falters as dollar slips