YAHOO [BRIEFING.COM]: A stronger dollar and disappointing data caused stocks to start the session in negative territory, while weakness among bank stocks soon added to broader market selling pressure. The major indices did make a midmorning upturn, but the move encountered resistance and stocks eventually rolled over.

Renewed support for the U.S. dollar drove the Dollar Index to a fresh two-month high and led to broad-based weakness in the stock market. The greenback pulled back a bit, but it still settled with a 0.7% gain against competing currencies. The move comes ahead of tomorrow's FOMC policy statement, which will be of primary focus as participants look for hints about any potential tightening of monetary policy.

Some have been concerned that the Fed's loose monetary policy will inevitably give way to runaway inflation, but others argue that is unlikely amid persistently weak labor markets. However, many made note that the November Producer Price Index increased 1.8% month-over-month, which is much sharper than the 0.8% increase that had been widely forecast. Excluding food and energy, November producer prices increased 0.5% month-over-month, which is stronger than the 0.2% that had been expected.

The Empire Manufacturing Index for December proved disappointing. It came in at 2.55, which is far below the 24.00 that had been forecast following the 23.51 that was posted in November.

Disappointment over the developments helped drive nine of the 10 major sectors in the S&P 500 to losses. Pressure was most intense against financials, which fell 1.7%. Regional banks were a primary source of weakness in the sector -- they dropped 3.6%.

However, Wells Fargo (WFC 25.66, +0.17) was able to finish with a modest gain after it became the latest bank to announce plans to repay TARP funds. To help fund the repayment Wells Fargo will issue $10.4 billion in common stock, but that will prove dilutive to existing shareholders.

There weren't many other corporate news items, but Best Buy (BBY 41.53, -3.84) beat earnings expectations and raised its outlook for fiscal 2010. The stock had a strong run ahead of the announcement, so many participants opted to sell the news.

Energy stocks outperformed for the entire session and finished with a 0.1% gain. The sector's strength came as natural gas futures prices rallied to close the session 3.6% higher at $5.52 per contract and crude oil futures finished pit trade with oil priced 1.7% higher at $70.69 per barrel, despite a stronger dollar.

Though energy traded with relative strength this session, it couldn't lift the broader market out of negative territory at all this session. The Nasdaq did spend part of the session in higher ground and even hit a fresh 52-week high, but weakness in the broader market gave way to widespread losses.

Advancing Sectors: Energy (+0.1%)
Declining Sectors: Financials (-1.7%), Telecom (-1.4%), Materials (-1.1%), Tech (-0.5%), Consumer Staples (-0.4%), Utilities (-0.4%), Industrials (-0.3%), Consumer Discretionary (-0.3%), Health Care (-0.1%)DJ30 -49.05 NASDAQ -11.05 NQ100 -0.6% R2K -0.6% SP400 -0.1% SP500 -6.18 NASDAQ Adv/Vol/Dec 1021/1.96 bln/1684 NYSE Adv/Vol/Dec 1212/1.18 bln/1815