The 13-nation euro hit a fresh record against the dollar -- rising to $1.4729 -- before falling back. The dollar fell not only against the euro but in Asia following a report that a senior Chinese political figure said China should diversify its $1.43-trillion foreign exchange reserves into the euro and other strong currencies.
The euro's rally put it well above the $1.4554 the currency bought late Tuesday in New York. The previous record high, also set Tuesday, was $1.4571.
The swooning dollar for a time sent oil above $98 per barrel and also pushed gold higher.
In midmorning trading, the Dow fell 155.58, or 1.14 percent, to 13,505.36. On Tuesday, the Dow gained about 117 points as some investors looked to snap up bargains despite overhanging concerns about the banking industry's exposure to bad debt.
Broader stock indicators also pulled back Wednesday. The Standard & Poor's 500 index fell 19.41, or 1.28 percent, to 1,500.86, and the Nasdaq composite index fell 33.47, or 1.18 percent, to 2,791.71.
Government bonds jumped as the dollar sank. The yield on the 10-year Treasury note, which moves opposite the price, fell to 4.35 percent from 4.37 percent late Tuesday.
Light, sweet crude rose 89 cents to $97.59 on the New York Mercantile Exchange. Investors awaited a weekly goverment read on domestic inventories due Wednesday morning.
December gold surged $16.10 to $839.50 an ounce on the Nymex.
Economic data arriving Wednesday appeared to offer some upbeat news, although investors remained concerned about the faltering dollar and rising prices for oil and gold. The Labor Department reported that worker productivity surged at an annual rate of 4.9 percent in the summer, the fastest pace in four years, while wage pressures eased.
Figures on U.S. wholesale inventories showed a greater-than-expected increase in September but that demand also held up.
Some corporate news didn't offer Wall Street much reason for cheering. General Motors Corp. reported a $39 billion loss for the third quarter due to an accounting shift. The company warned late Tuesday it would book a $38.6 billion noncash charge largely related to establishing a valuation allowance. A valuation allowance is taken when the future benefit of the deferred tax assets is less likely to be realized.
GM's loss came to $68.85 per share, compared with a loss of $147 million, or 26 cents per share, in the third quarter a year earlier. The stock fell $1.32, or 3.7 percent, to $34.84.
In other corporate news, media conglomerate Time Warner Inc. posted a 53 percent decline in its third-quarter earnings from a year earlier when results benefited from tax and investment gains. Results from the parent of HBO, Warner Bros., Time Warner Cable and Time magazine were in line with estimates of analysts polled by Thomson Financial. The stock rose 10 cents to $18.43.
Foster Wheeler Ltd. rose $11.21, or 8.3 percent, to $146.52 after the provider of engineering and construction services said growth abroad helped boost quarterly profits 70 percent.
Fluor Corp., an engineering-services company, posted third-quarter profits and revenue that fell short of Wall Street's expectations amid an absence of lucrative goverment contracts that boosted results a year earlier. The stock fell $5.63, or 3.7 percent, to $148.19.
Declining issues outnumbered advancers by about 5 to 1 on the New York Stock Exchange, where volume came to 360.2 million shares.
The Russell 2000 index of smaller companies fell 13.40, or 1.67 percent, to 788.37.
Overseas, Japan's Nikkei stock average closed down 0.94 percent. In afternoon trading, Britain's FTSE 100 fell 0.92 percent, Germany's DAX index fell 0.06 percent, and France's CAC-40 fell 0.53 percent.
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