Wall Street closes lower as investors lose risk appetite

In a week dominated by continued flows of cheap money into world markets, investors’ faith in higher-risk assets, such as shares, commodities and higher-yielding currencies, is beginning to wane.

Confidence that the US Federal Reserve will keep its interest-rate target near zero well into 2010 lifted major stock indexes to fresh 13-month highs earlier in the week.

Stocks on Wall Street then began to sag as the rally died, starting a three-day losing streak that continued on Friday as investors switched to the US dollar and bonds.

Prices kicked up in the final half hour but the lift proved short-lived as the Dow Jones Industrial Average fell 14.28 points, or 0.1% to 10,318.16, despite gains in health-care components Merck and Pfizer. The Dow was up 0.5% for the week.

The energy sector suffered due to a pullback in commodity prices and Goldman Sachs’ removal of coal producer Peabody Energy from its "conviction buy" list.
Tech issues fell across the board, sparked by investor disappointment over Dell's latest earnings report.

Other stock measures also edged lower. The tech-focused Nasdaq Composite Index was off 0.5%, hurt in part by a 9.3% decline in Dell. The S&P 500 was down 0.3% at 1091, led by a 0.7% decline in its energy sector.

The S&P categories that traded higher in late action were utilities, consumer staples and health care, all sectors that are traditionally used as defensive bets. The index's 0.2% drop for the week was the first weekly decline since October.

European stock markets ended the week on a four-day losing streak, with sentiment leaning toward the negative side as investors fretted about the robustness of the global economic recovery.

The drop ended the longest rally in four months.

The pan-European Stoxx 600 index closed 0.7% lower at 243.74. The UK's FTSE 100 index eased 0.3% to 5251.41, France's CAC-40 index fell 0.8% to 3729.36 and Germany's DAX declined 0.7% to 5663.15.

Commodities: Oil down, gold up

Crude-oil futures weakened as stocks traded lower and the dollar gained strength.
Light, sweet crude for December delivery fell 25USc to $77.21 a barrel in New York. Brent crude on the ICE futures exchange traded 16 cents lower at $77.48 a barrel.

Traders in the oil market are using equities to gauge the strength and pace of the US economic recovery, with a lower opening translating into expectations of weak oil demand. A stronger dollar makes dollar-denominated oil more expensive for holders of other currencies.

Gold prices climbed for the sixth straight session on speculation that the dollar will reverse its recent rise.

The dollar touched a 15-month low against a basket of major currencies on November 16 but has since climbed as much as 0.8%.

Gold reached a record $US1153.40 an ounce on November 18 and has fallen once in 15 sessions this month.

Currencies: Euro down, dollar, yen up

The dollar strengthened 0.4% to $US1.4862 per euro in New York, from $US1.4925 on Thursday. It touched $US1.4802, the weakest level since November 4.

The yen appreciated 0.5% to ¥132.09 per euro, from ¥132.79, and completed a 1.2∞ rally for the week. The US currency was little changed at ¥88.88, compared with ¥88.97, after touching ¥88.64 on Thursday, the lowest level since October 9.

The dollar was up 0.3% versus the euro and down 0.9% against the yen for the week.