US STOCKS-Stronger dollar weighs on Wall Street

* Yahoo gains after WSJ reports AOL eyes tie-up

* Financial shares weigh

* Indexes: S&P off 0.4 pct, Dow off 0.5 pct, Nasdaq flat

* For up-to-the-minute market news see [STXNEWS/US]
(Updates to early-morning trading)

By Edward Krudy

NEW YORK, Nov 8 (BestGrowthStock) – The Dow and S&P 500 fell on
Monday after hitting two-year highs last week as a stronger
dollar weighed on the market although the tailwinds of monetary
easing and signs of a stronger economy capped losses.

The dollar has traded in a strong inverse relationship to
U.S. equities recently. An unwinding of dollar short positions
that began after solid U.S. jobs data last Friday gathered
pace, while concerns over euro zone debt hurt the euro. The
dollar rose 0.7 percent against a basket of currencies.
(.DXY: ).

U.S. stocks (Read more about the stock market today. ) have risen for five straight weeks and
surpassed levels not seen since before the Lehman Brothers
bankruptcy. The rally has been helped by Republican gains in
the U.S. midterm elections and the Federal Reserve’s plans to
buy $600 billion of government debt in a bid to reinvigorate a
sluggish economic recovery.

Nicholas Colas, chief market strategist at the ConvergEx
Group in New York, said the stronger dollar was weighing on
equities after their recent strong run but added the underlying
trend was still upward.

“We are still in an environment where the market is in an
up trend,” he said. “It’s the quantitative easing, it’s the
hope for some continued better economic numbers like what we
had from the Friday jobs report.”

The Dow Jones industrial average (.DJI: ) dropped 58.39
points, or 0.51 percent, to 11,385.69. The Standard & Poor’s
500 Index (.SPX: ) lost 5.08 points, or 0.41 percent, to
1,220.77. The Nasdaq Composite Index (.IXIC: ) dropped 0.12
points, or 0.00 percent, to 2,578.86.

Financial stocks were among the biggest losers, with the
the S&P financial index (.GSPF: ) down 0.7 percent, weighed by
Well Fargo & Co (WFC.N: ), which dropped 1.5 percent to $28.78
and State Street Corp (STT.N: ), which fell 1.9 percent to
$44.61.

Metals prices slipped as the dollar rose, while oil futures
fell 0.6 percent toward $86 a barrel, easing from two-year
highs earlier in the session. Gold was off for the first time
in three sessions but remained near record highs. For details,
see [ID:nN07170469]

Shares of Alcoa Inc (AA.N: ), the largest U.S. aluminum
producer, fell 1.4 percent to $13.81, while Exxon Mobil Corp
(XOM.N: ) eased 0.3 percent to $69.82.

In corporate news, AOL Inc (AOL.N: ) is exploring strategic
options, including a tie-up with Yahoo Inc (YHOO.O: ), and has
hired financial advisers, the Wall Street Journal reported,
citing sources. Yahoo rose 1.2 percent to $16.46, while AOL
added 1.3 percent to $25.25. [ID:nSGE6A7068]

McDonald’s Corp (MCD.N: ) fell 0.4 percent to $78.95 after it
reported a weaker-than-expected rise in October sales at U.S.
established restaurants as high unemployment plagued its key
domestic market. [ID:nN08202623]

Helping the Nasdaq, Intel Corp (INTC.O: ) added 1.1 percent
to $21.48 after UBS raised the stock’s rating to “buy” from
“neutral” and estimated the semiconductors sector will see
another couple of quarters of inventory adjustment globally.
[ID:nWNAB0678]

The S&P 500 faces strong resistance at about 1,228, a key
retracement of the benchmark’s slide from its historic high in
2007 to the 12-year low in March 2009.
(Reporting by Edward Krudy; editing by Jeffrey Benkoe)

US STOCKS-Stronger dollar weighs on Wall Street