Stocks hold gains as the dollar's slide eases

Ieva M. Augstums and Sara Lepro / Associated Press

New York -- Investors cooled their buying of stocks and commodities, pausing from a surge that's carried major stock indexes to their highest levels in more than a year.

Stocks wavered in a tight range today, a day after the Dow Jones industrials shot up 200 points for the second time in three days. Following a recent pattern, the stock market on Monday took its cue from the dollar, driving higher as the dollar weakened.

Today, investors increased their buying of safe-haven assets like the dollar and Treasurys. The ICE Futures US dollar index, which measures the dollar against other currencies, crept up 0.2 percent in morning trading.

"People are reaching for a little less risk today after we've had such a run," said Bill Stone, chief investment strategist at PNC Wealth Management.

Record-low interest rates in the U.S. and the slide in the dollar that resulted have been major factors behind the surge in stocks over the past several months. A weaker dollar allows investors to borrow money cheaply, while the low interest rates also encourage them to hold any assets other than low-yielding cash, such as stocks, commodities and bonds.

The falling dollar has enabled many investors to look past some of the economy's persistent trouble spots, including rising unemployment. The jobless rate rose to 10.2 percent in October, the highest level in 26 years.

A number of market watchers still believe that the recent upsurge in stocks has been overdone given the weaknesses that remain in the economy, such as the large amounts of souring loans on banks' balance sheets.

In early trading, the Dow rose 6.12, or 0.1 percent, to 10,233.06. The Standard & Poor's 500 index fell 0.15, or 0.01 percent, to 1,092.93, while the Nasdaq composite index rose 1.83, or 0.1 percent, to 2,155.89.