Weak tech, bank stocks pull in­dexes back from record highs WALL STREET WEEKLY ROUNDUP

Kuwait Times - - BUSINESS -

NEW YORK: Fall­ing tech­nol­ogy and fi­nan­cial stocks pulled US in­dexes back from the edge of record highs on Fri­day. Bond yields gave up some of their big gains from the last few days, and the dol­lar down­shifted from its sharp climb against other cur­ren­cies.

The Stan­dard & Poor’s 500 index fell 3.96 points, or 0.2 per­cent, to 2,258.07. It had wob­bled up and down through the day, never ris­ing by more than 0.3 per­cent or fall­ing by more than 0.3 per­cent.

The Dow Jones in­dus­trial av­er­age fell 8.83 points, or less than 0.1 per­cent, to 19,843.41. The Nasdaq com­pos­ite fell 19.69, or 0.4 per­cent, to 5,437.16 af­ter climb­ing above its record clos­ing level ear­lier in the day. All three in­dexes re­main within 1 per­cent of their record highs. Fri­day’s moves close a week where stocks slowed their sharp as­cent since last month’s pres­i­den­tial elec­tion, and bond yields and the dol­lar con­tin­ued their big gains. A driv­ing force was the Fed­eral Re­serve’s move on Wed­nes­day to raise in­ter­est rates for only the sec­ond time in a decade and indi­cate sev­eral more in­creases may be in store for 2017.

The dol­lar gave back a smidgen of its gains on Fri­day. The ICE US Dol­lar index, which mea­sures the dol­lar against six other cur­ren­cies, dipped 0.2 per­cent. The index re­mains close to its high­est level in 14 years. The yield on the 10-year Trea­sury like­wise re­gressed a bit Fri­day, dip­ping to 2.59 per­cent from 2.60 per­cent late Thurs­day. It’s still near its high­est level since 2014.

Fri­day’s drop in yields helped drive stocks that pay big div­i­dends higher. They of­ten trade in the op­po­site di­rec­tion of in­ter­est rates on ex­pec­ta­tions that in­come in­vestors will buy them when bond yields are drop­ping. Those sec­tors had strug­gled in re­cent days.

Util­ity stocks and real-es­tate in­vest­ment trusts both rose 1.2 per­cent on Fri­day, the largest gains among the 11 sec­tors that make up the S&P 500. Banks and other fi­nan­cial stocks fell in a rare off-day. The sec­tor has been cruis­ing since last month’s elec­tion on ex­pec­ta­tions that higher in­ter­est rates will boost their prof­its. Fi­nan­cial stocks in the S&P 500 fell 0.9 per­cent. Bank of Amer­ica fell 50 cents, or 2.2 per­cent, to $22.66, and Re­gions Fi­nan­cial fell 32 cents, or 2.2 per­cent, to $14.20.

Tech­nol­ogy stocks in the S&P 500 fell 0.8 per­cent. Soft­ware gi­ant Or­a­cle fell $1.76, or 4.3 per­cent, to $39.10 af­ter re­port­ing rev­enue for its lat­est quar­ter that fell short of an­a­lysts’ ex­pec­ta­tions.

De­spite drops for the S&P 500 and other in­dexes, more stocks rose on the New York Stock Ex­change than fell. Among them was Chipo­tle Mex­i­can Grill, which jumped $9.72, or 2.5 per­cent, to $392.07. The restau­rant chain said four new direc­tors will join its board as part of an agree­ment with ac­tivist in­vestor Bill Ack­man’s Per­sh­ing Square. Ja­bil Cir­cuit rose $2.58, or 12 per­cent, to $24.15 af­ter re­port­ing stronger earn­ings for its lat­est quar­ter than an­a­lysts ex­pected.

Big gains since last month’s elec­tion mean stocks gen­er­ally are more ex­pen­sive rel­a­tive to their earn­ings, a key gauge in­vestors use to mea­sure whether the mar­ket is over­priced. The S&P 500 is trad­ing at about 19 times its earn­ings per share over the last 12 months, ac­cord­ing to Fact Set. That com­pares with its av­er­age price-earn­ings ra­tio of 15.6 over the last 15 years and is an indi­ca­tion that stocks are, if not ex­pen­sive, no longer cheap. And that, in turn, im­plies lower fu­ture re­turns than the big gains in­vestors have en­joyed since the Great Re­ces­sion’s end. “I do think we’re in a low-re­turn en­vi­ron­ment,” says Bernie Wil­liams, chief in­vest­ment of­fi­cer for USAA’s Wealth Man­age­ment In­vest­ment So­lu­tions. “Of course, we thought that at the start of this year, too, and here we are up 10 per­cent.”

In for­eign stock mar­kets, Ja­pan’s Nikkei 225 gained 0.7 per­cent, South Korea’s Kospi rose 0.3 per­cent and Hong Kong’s Hang Seng fell 0.2 per­cent. In Europe, Ger­many’s DAX rose 0.3 per­cent, France’s CAC 40 rose 0.3 per­cent and Bri­tain’s FTSE 100 rose 0.2 per­cent. Crude oil rose $1 to set­tle at $51.90 a bar­rel in New York. Brent crude, the in­ter­na­tional stan­dard, rose $1.19 to close at $55.21 a bar­rel in Lon­don. Nat­u­ral gas slipped nearly 2 cents to set­tle at $3.415 per 1,000 cu­bic feet, whole­sale gaso­line rose 1.5 cents to $1.56 a gal­lon and heat­ing oil rose 3 cents to $1.67 a gal­lon.

Gold re­cov­ered a bit af­ter fall­ing to its low­est price in 10 months on Thurs­day. It rose $7.60 to set­tle at $1,137.40 an ounce. Sil­ver rose nearly 26 cents to $16.22 an ounce, and cop­per fell 3.6 cents to $2.56 a pound. The euro rose to $1.0433 from $1.0424, the Bri­tish pound rose to $1.2476 from $1.2436 and the dol­lar climbed to 118.01 Ja­panese yen from 117.93 yen. — AP

NEW YORK: The Amer­i­can flag flies above the Wall Street en­trance to the New York Stock Ex­change. US stock in­dexes held steady near record lev­els Fri­day af­ter gains for com­pa­nies that pay big div­i­dends helped to off­set drops in tech­nol­ogy stocks. — AP

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