Wall St slips as dollar's fall raises worries

U.S. stocks fell on Thursday as weakness in the dollar raised worries about inflation two days after the Federal Reserve's aggressive interest-ate cut and FedEx Corp. (FDX.N: Quote, Profile, Research) cut its earnings outlook.
Oil prices touched a record high above $84, adding to the inflation worries.
The move by package delivery company FedEx raised doubts about growth in the economy. In addition, the National Retail Federation said U.S. holiday sales are expected to rise at their slowest pace in five years.
A drop in the dollar to a record low against the euro, now worth more than $1.40, was a worrying side effect of the Fed's decision Tuesday to cut benchmark lending rates by a hefty half a percentage point, analysts said. The Fed cut rates to keep the economy from slipping into recession.
Financial stocks, which surged following the Fed's move, were among the top drags. The S&P financial index (.GSPF: Quote, Profile, Research) was down 1.8 percent. Home builders' stocks also dropped.
"It's waves of profit-taking, and concern about the lower dollar, which is in reaction to the Fed cutting rates as aggressively as it did," said Marc Pado, U.S. market strategist in the San Francisco office of Cantor Fitzgerald & Co.
The Dow Jones industrial average (.DJI: Quote, Profile, Research) was down 64.30 points, or 0.47 percent, at 13,751.26. The Standard & Poor's 500 Index (.SPX: Quote, Profile, Research) was down 12.43 points, or 0.81 percent, at 1,516.60. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was down 17.77 points, or 0.67 percent, at 2,648.71.
While a weakening dollar can give a lift to shares of companies that are big exporters, it also threatens to worsen inflation because of the United States' heavy reliance on imported goods. A weaker dollar may make owning U.S. shares less attractive to foreign investors.
FedEx lowered its full-year earnings outlook due to the weaker-than-anticipated economic environment, sending its shares down 1.8 percent to $105.55.
Shares of Circuit City Stores Inc (CC.N: Quote, Profile, Research) sank 18.4 percent to $8.63 after the home electronics seller reported a larger-than-forecast quarterly loss.
Bear Stearns Co Inc (BSC.N: Quote, Profile, Research) shares declined 0.4 percent to $115.24, reversing earlier gains, when they climbed as high as $119.50. The investment bank posted a sharply lower profit but its chief financial officer Sam Molinaro said the worst of times are behind the company. He said he sees business returning to normal in 2008.
Among retailers, shares of Home Depot Inc. (HD.N: Quote, Profile, Research) fell 2.7 percent to $35.22. The S&P retail index (.RLX: Quote, Profile, Research) was down 2.5 percent.
At midday, stocks had briefly pared losses after stronger-than-expected data on factory activity in the U.S. mid-Atlantic region from the Federal Reserve Bank of Philadelphia.