Reuters
Investors: Don't Blame Dollar for Market
Monday May 19, 12:52 pm ET
By Nicholas Olivari
NEW YORK (Reuters) - Stocks tumbled Monday as the dollar hovered near multiyear lows against the yen and euro, but several money managers said the market's performance had more to do with the sharp recent boost in prices and less to concerns with the greenback.
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They held that view despite comments made this weekend by U.S. Treasury Secretary John Snow, attending a Group of Seven finance ministers in France, who said the U.S. currency's recent weakness was "a modest realignment."
The Treasury chief's remarks were interpreted as a sign that the U.S. was pulling back from its strong dollar policy, and some said it contributed to Monday's market decline, after a two-month rally.
However, White House spokesman Ari Fleischer (News) said on Monday there has been no change in U.S. dollar policy.
"What's different? What's changed?" asked Tim Ghriskey, a money manager with Bedford Hills, New York-based Ghriskey Capital Partners LLC.
Ghriskey said he did not see any news, including Snow's comments, that would make Monday's sell-off anything other than a reaction to the market's recent run-up.
"It's purely an excuse with people selling on a technical basis because the market is overbought," Ghriskey said.
Though all the major indexes tested the lows in March, they have since rallied strongly -- pushing them into positive territory for the year.
The Standard & Poor's 500 index (CBOE:^SPX - News) is up 5 percent in 2003, the Dow Jones industrial average (CBOT:^DJI - News) is up 2 percent, and the Nasdaq Composite index (NasdaqSC:^IXIC - News) is up 13 percent.
"Investors are looking for a reason to sell," agreed Lester Rich, a money manager with Malvern, Pennsylvania-based StoneRidge Investment Partners LLC.
Though in the long term, a weaker dollar has negative implications for the economy, Rich was quick to point out that in the near term, it should be a plus.
"A weaker dollar clearly helps a large number of multinationals, so it's not necessarily a bad thing from an earnings perspective on a short-term basis," Rich said.
Other money managers said few retail investors will even notice a change in the U.S. dollar policy.
The dollar "is getting a little softer, but it's an excuse to take some profits," said Alan Day, senior portfolio manager with Burlington, Vermont-based Banknorth Investment Management Group, which oversees $8 billion. "I don't think to the guy on the street it makes a difference."
