NEW YORK – Caution returned to the stock market Tuesday as investors decided to slow an advance that has lifted the Dow Jones industrial average 475 points in five days.
Stocks mostly fell in light trading, though the Dow tacked on 20 points to close at a new high for the year. The modest advance came a day after the Dow shot up 200 points for the second time in three days.
Broader indexes slipped as the market again took its direction from the dollar. Stocks drove higher Monday as the dollar weakened and slipped Tuesday as the currency rose.
“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 resulting slide in the dollar have been major forces behind the surge in stocks in recent months. A weaker dollar allows investors to borrow money cheaply, while 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 unemployment. The jobless rate rose to 10.2 percent in October, the highest level in 26 years.
A number of market watchers still believe this recent surge in stocks has been overdone given the weakness that remains in the economy, such as the sour loans still on banks’ balance sheets. Still, some analysts said the ability of major stock indexes to hold their recent gains is a welcome sign.
The Dow rose 20.03, or 0.2 percent, to 10,246.97, its highest close since Oct. 3, 2008. The Dow traded up to 10,260.80, a 12-month high. The five-day gain is the Dow’s first since September and has pushed the index up 4.9 percent.
The broader Standard & Poor’s 500 index slipped 0.07, or less than 0.1 percent, to 1,093.01, after six days of gains. The Nasdaq composite index fell 2.98, or 0.1 percent, to 2,151.08.
Three stocks fell for every two that rose on the New York Stock Exchange, where consolidated volume came to 4.4 billion shares, compared with 4.6 billion Monday.
