Bank stocks weigh on shares and bonds as Dow backs further from 20,000 benchmark
NEW YORK (Reuters) – US and European shares, the dollar and bond yields all headed lower on Thursday, with traders using the quiet holiday period to book some profits on the heady gains stocks have seen in the final quarter of 2016 and reposition for the year ahead.
US benchmark indexes were fractionally lower near midday in the aftermath of the S&P 500’s biggest drop in more than two months a day earlier.
As in Europe, financial stocks, which have seen a tremendous run since the US presidential election on the back of higher interest rates, were exerting the greatest downward pressure as bond yields retreated further from their recent highs. US and European bank stocks both were down by more than 1%.
“It’s really investor malaise,” said Alan Lancz, president of Alan B. Lancz & Associates Inc., an investment advisory firm in Toledo, Ohio. “There’s no strong activity either way, buy or sell, and light volume.”
“This past week, it’s been the buyers pulling back and done with their buying, and the sellers have been hesitant, even since the election, because they’d rather sell into 2017,” he said. “So now you have no activity either way really, and that’s why the volume has really dried up.”
The stall on Wall Street put yet more distance between the blue-chip Dow Jones Industrial Average and the much-vaunted 20,000 mark. The Dow has gained more than 8% since Donald Trump’s victory in the November 8 US presidential election and has come within 20 points of the milestone repeatedly without successfully crossing the line.
In late-morning US trade, the Dow was down 0.01% at 19,832, the S&P 500 was off 0.03% at 2,249, and the Nasdaq slid 0.2% to 5,427.
The yield on 10-year US Treasury notes slipped to a twoweek low as the bond-market sell-off fizzled, pulling the dollar to a two-week low against the yen.
Europe’s index of the leading 300 shares fell 0.5%. The yen’s strength, along with a 17% slump in Toshiba Corp.’s shares after news of potential massive write-downs led to a downgrade to its credit ratings, contributed to a 1.3% fall for the Nikkei.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.45%, helping to keep global stocks in positive territory with a slender 0.17% gain.
Euro-zone bond yields were also falling on concerns about the strength of a rescue plan for Italian banks and normal yearend caution.
Germany’s 10-year yields hit their lowest in seven weeks at 0.164%, before recovering some ground, after their discount to Treasury yields reached its widest on record earlier in the week. The spread remained not far off that mark on Thursday at 2.31 percentage points. The US 10-year yield slipped back below the key 2.50% mark, retreating further from a two-year high above 2.60% in mid-December.
The dollar eased by 0.6% against the yen to 116.55. Sterling recovered from a twomonth low to trade 0.3% higher at $1.2263. The euro was 0.7% stronger against the greenback.
In commodity markets, oil was mixed after data showed a surprise buildup in US crude inventories. US crude fell 0.2% to $53.95 a barrel. Brent was last down 0.04% at $56.20.