Wall Street muted by health stocks as Italy, ECB boost European shares
NEW YORK (Reuters) – Wall Street’s rise was held back by health stocks on Wednesday, while European stocks rose on reports Italy would step in to rescue troubled bank Monte dei Paschi and on expectations the European Central Bank would extend its bond-buying program.
Major currencies treaded water, with traders waiting on the ECB’s meeting on Thursday to find out if its monthly bond purchases will be kept steady or scaled back and whether it will signal the eventual end of the program.
Prices on longer-dated US Treasuries rose following a large block purchase of 10-year Treasury-note futures after disappointing overseas data pushed foreign yields lower.
Health-care stocks were the biggest drag on the S&P 500 after a report that President-elect Donald Trump said he would bring down pricing. This led the benchmark S&P to take a breather after three days of advances.
“When we have run up so high, it’s common that there is some sensitivity in the market, maybe due to softer oil prices or just the technical aspects of being at such high levels,” said Peter Cardillo, chief market economist at First Standard Financial in New York.
The Dow Jones Industrial Average was up 15.43 points, or 0.08%, to 19,267.21 in afternoon trading, the S&P 500 gained 2.28 points, or 0.1%, to 2,214.51, and the Nasdaq Composite dropped 1.39 points, or 0.03%, to 5,331.61.
Oil prices fell as investors questioned whether a deal to cut output agreed to last week by the Organization of the Petroleum Exporting Countries and others would be enough to drain a global glut.
Brent crude, the international benchmark, fell 75 cents to $53.19 a barrel. US light crude was down 94 cents at $49.99 a barrel.
The pan-European STOXX 600 index rose 0.7%, while Italy’s FTSE MIB share index gained 1.7% to hit its highest point since May as the country’s banking stocks continued their rally.
Shares in Monte dei Paschi, Italy’s oldest bank, rose about 9%, and an index of Italian lenders’ shares rose 5% after jumping 9% in the previous day’s session.
Reuters had reported exclusively on Tuesday that Italy was preparing to take a €2 billion controlling stake in the bank as prospects of a private-funding rescue faded following Prime Minister Matteo Renzi’s decision to resign after voters rejected his proposals for constitutional reform.
The euro edged up 0.3% to $1.075. The dollar index, which measures the US currency against a basket of six of its major peers, was down 0.2%.
Benchmark 10-year Treasury notes were up 12/32 in price to yield 2.351%, down 4.5 basis points from late on Tuesday. The 10-year yield retreated further from a near 18-month peak struck on December 1 at 2.492%, according to Reuters data.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6%, while Japan’s Nikkei added 0.7%. Chinese shares gained 0.5%.