Stocks fall for third day as dollar strengthens

• By STEPHEN BERNARD & TIM PARADIS
• AP business writers
• Published: Nov 20, 2009 - UPDATED: 2:15 p.m.

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NEW YORK (AP) -- The stock market lost ground for a third straight day as investors grew uneasy about a rising dollar and spiking demand for the safest government debt.

A disappointing earnings report from computer maker Dell Inc. weighed on technology shares Friday and hurt the Nasdaq composite index.

Demand for safe havens rose following Dell's report and as European Central Bank President Jean-Claude Trichet said the ECB plans to start reining in some of its stimulus programs. Hiking borrowing rates could help keep inflation in check but could also slow improvement in the economy.

Investors seeking safety pushed into the dollar. A strengthening dollar curtails foreign demand for commodities, which are traded in dollars. It also can depress U.S. exports, which become more expensive as the dollar rises.

The advancing dollar hurt energy and materials stocks, which are closely tied to commodities.

Investors looked for stable government investments. The yield on the three-month T-bill, which moves opposite its price, was flat at 0.02 percent from late Thursday. It stands near its lowest level of the year, which it hit Thursday. Yields briefly turned negative Thursday as investors seeking to pad their portfolios with safe investments before the end of the year were willing to accept losses.

"Investors seem to need a constant reassurance with where we are in the economic recovery," said Brett D'Arcy, chief investment officer at CBIZ Wealth Management Group in San Diego. "We just haven't gotten it in the past few days."

In midafternoon trading, the Dow Jones industrial average fell 23.42, or 0.2 percent, to 10,309.02. The Dow fell 105 points, or 1 percent, in the past two days.

The broader Standard & Poor's 500 index fell 4.51, or 0.4 percent, to 1,090.39, while the Nasdaq fell 18.64, or 0.9 percent, to 2,143.94.

The ICE Futures US dollar index, which measures the dollar against other major currencies, rose 0.4 percent.

Demand for longer-term Treasurys fell, pushing yields higher. The yield on the benchmark 10-year note fell to 3.37 percent from 3.34 percent.

D'Arcy said he expected stocks would slide Friday because of economic numbers that arrived during the week.

Reports Wednesday and Thursday showing a drop in housing starts and a jump in mortgage delinquencies upended an advance that had been all but unbroken in November. Those figures brought worries that an economic recovery will be slow and bumpy.