Stocks slip as concerns about foreign debt offset weaker dollar; wholesale inventories rise

Stocks fall on concerns about foreign debt

NEW YORK — Concerns about foreign debt problems tripped up the stock market for a second day in a row.

The dip followed a steep drop Tuesday that carried over into Asia overnight as concerns about foreign debt loads escalated. Markets were also weighed down by a report that Japan’s economy grew at a lower rate than originally expected in the third quarter.

A weakening of the dollar, a big factor behind the market’s rally this year, helped keep the losses in check.

The dollar has fallen steadily against other currencies since March as investors take advantage of cheap financing to invest in riskier, higher-yielding assets like stocks and commodities. That decline in the dollar occurred as investors became more willing to take on risk and move out of safe-haven investments like the dollar amid signs that the economy was improving.

In recent weeks, however, investors have been shuttling between stocks and seeking safety in U.S. dollar cash investments as they try to determine how strong the economic recovery will be and where they will be able to make the biggest returns.

Separately, the Commerce Department reported that businesses added to inventories at the wholesale level in October after a record 13 straight months of reductions. Investors hope it is a sign that businesses will soon start restocking store shelves. Wholesale inventories rose 0.3 percent in October; economists had expected a 0.5 percent drop.

In midmorning trading, the Dow Jones industrial average fell 9.90, or 0.1 percent, to 10,276.07. The Standard & Poor’s 500 index fell 2.28, or 0.2 percent, to 1,089.66, while the Nasdaq composite index fell 10.00, or 0.5 percent, to 2,162.99.

As the end of the year approaches, many investors are looking to lock in some of the big gains they’ve made this year, and many have been adding defensive investments like the dollar and Treasurys. The uncertain tone in the market, combined with light trading volume, has made for choppy trading, which analysts expect to continue through the rest of the year.

The ICE Futures US dollar index, which tracks the dollar against other major currencies, fell 0.2 percent.

While investors want to see the economy grow, they also know that the Federal Reserve could raise interest rates and remove other stimulus measures once the economy appears to be on solid footing. Higher rates could make stocks look less appealing as returns for other investments improve, potentially upsetting a nine-month advance in stocks that has lifted the S&P 500 index by 61.4 percent.

Treasurys, also considered safe-haven assets, were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was flat at 3.39 percent from late Tuesday.

Commodities prices were mixed. Gold fell, while oil rose 24 cents to $72.86 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 4.00, or 0.7 percent, to 593.55.

Overseas, Japan’s Nikkei stock average fell 1.3 percent and Hong Kong’s Hang Seng index fell 1.4 percent. In afternoon trading, Britain’s FTSE 100 fell 0.7 percent, Germany’s DAX index fell 1.2 percent, and France’s CAC-40 fell 1.1 percent.