Oil and banks lift Dow to new high
Technology companies plunged Thursday, and high-dividend stocks took hefty losses as bond yields rose to their highest level in more than a year. But more big gains for blue-chip banking and oil stocks pulled the Dow Jones industrial average to a record high.
Big names such as Facebook and Oracle fell as tech firms took their biggest losses in two months. Rising bond yields pushed income seeking investors away from real estate and utility firms. Healthcare stocks slumped.
Banks continued to soar. Oil prices climbed for the second day after the countries of OPEC agreed to trim oil production next year.
Karyn Cavanaugh, senior market strategist for Voya Investment Strategies, said a focus on President-elect Donald Trump's trade policies might be hurting tech stocks. “If you're going to bring jobs back to America and make stuff here, tech is going to be pretty vulnerable,” she said. “If there's going to be a trade war, tech is pretty vulnerable.”
Bond prices kept falling, sending benchmark yields higher. The yield on the 10year Treasury note rose to 2.44% from 2.38%, its highest since July 2015. That sent bank stocks higher because higher bond yields are linked to higher interest rates, which enable banks to make more money from lending.
Goldman Sachs jumped 3.3% to $226.63, its highest price since December 2007.
Facebook sank 2.8% to $115.10 and chip maker Analog Devices slid 7% to $69.01. Microsoft fell 1.8% to $59.20.
After a big gain Wednesday, the dollar slipped to 114.03 yen from 114.22 yen. The euro rose to $1.0649 from $1.0599. In the last few weeks, the dollar has reached a 13year high against other currencies. A strong dollar hurts profits and sales for companies that do a lot of business overseas.
Oil prices rallied again and reached their highest level since mid-October. Benchmark U.S. crude rose 3.3% to $51.06 a barrel. Brent crude advanced 4.1% to $53.94 a barrel. Chevron shares rose 1.6% to $113.29.
Auto sales climbed in November, emerging from a recent slump. U.S. auto sales broke records last year and there have been some signs recently that demand is waning, but a Toyota executive said Thursday that he thinks sales could set a new record in 2016.
GM shares rose 3.9% to $12.43 and Ford stock climbed 5.5% to $36.43 after the firms posted stronger sales growth than expected.
Parker-Hannifin, which makes motion and control products, said it will pay about $4 billion to buy Clarcor, a maker of mobile, industrial and environmental filtration products. The deal values Clarcor at $83 per share and its stock jumped 17.2% to $82.58. Parker-Hannifin rose 3.3% to $143.47.