US STOCKS-S&P, Nasdaq fall as dollar strengthens

                                

                                
 * Netflix, eBay jump after quarterly results
                                
 * Dollar gains as stocks come off their highs
                                
 * Dow down 0.1 pct, S&P down 0.2 pct, Nasdaq down 0.5 pct
 * For up-to-the-minute market news see [STXNEWS/US]
 (Updates to late afternoon, changes byline)
                                
 By Edward Krudy
                                
 NEW YORK, Oct 21 (Reuters) - The S&P and Nasdaq edged down
 on Thursday as a stronger U.S. dollar weighed on the equity
market and ended a rally sparked by stronger-than-expected
earnings.
                                
 The Dow rose slightly, helped by McDonald's Corp <MCD.N>
and Travelers Cos Inc <TRV.N>, which reported
stronger-than-expected results.
                                
 Investors have been trading the dollar and equities against
each other recently as expectations the Federal Reserve will
pump billions into the economy have pressured the greenback and
lifted stocks.
                                
 Commodity-linked stocks have been among the most sensitive.
Occidental Petroleum Corp <OXY.N> fell 2.8 percent to $78.69
while the S&P energy index <.GSPE> fell 0.7 percent as oil
dropped more than 2 percent to near $80 per barrel.
                                
 "The trade has been: weak dollar is good for commodities
and is good for any risk-related assets like equities. On
dollar weakness, buy those things; on dollar strength, get out
of those things," said Bill Strazzullo, partner and chief
investment strategist at Bell Curve Trading in Boston.
                                
 The euro and the popularly traded S&P E-mini futures
contract have tracked each other closely in the last month. In
the past 22 sessions, they have had a positive correlation
coefficient of 0.89.
                                
 The euro had earlier climbed to a high around $1.4050 but
failed to sustain gains above key resistance at $1.40 and was
trading down 0.3 percent to $1.3924.
                                
 The Dow Jones industrial average <.DJI> edged up 7 points,
to 11,114. The Standard & Poor's 500 Index <.SPX> lost 2.47
points, or 0.21 percent, to 1,175.70. The Nasdaq Composite
Index <.IXIC> fell 10.97 points, or 0.45 percent, to 2,446.42.
                                
 Banking stocks were weak as investors continued to wrestle
with confusion in the mortgage market and the chance Bank of
America <BAC.N> might have to buy back mortgages bonds. The
stock fell 3.1 percent to $11.38 and has lost over 15 percent
over the last 7 days.
                                
 "People have been talking about Bank of America for the
last few days, and they're going to continue to talk about bank
of America until they get better direction from management in
quantifying what the true exposure is," said Weston Boone, vice
president listed trading, Stifel Nicolaus Capital Markets.
                                
 McDonald's gained 1.1 percent to $78.29 after it beat
expectations for quarterly profit and same-store sales growth
in September.
                                
 Travelers' shares gained 0.2 percent to $54.75 after the
largest publicly traded U.S. property casualty insurer easily
beat estimates as premiums rose in its personal insurance
lines. [ID:nN21165866] and [ID:nN21266849].
                                
 Stocks rose nearly 1 percent earlier but the gains were
trimmed by afternoon trade as the U.S. dollar <.DXY> gained
ground. The dollar was up 0.4 percent against major currencies,
while the euro <EUR=> fell 0.2 percent.
                                
 Online auctioneer eBay <EBAY.O> rose 6.5 percent to $27.32.
Netflix, the movie rental and streaming service, jumped 11.7
percent to $171.07 after both reported upbeat results late
Wednesday. [ID:nN20228251] and [ID:nN20229905].
 (Reporting by Edward Krudy; Editing by Kenneth Barry)