Stocks rally, but end a bit lower
U.S. stocks closed slightly lower Wednesday, making up much of the ground they lost earlier after a rare batch of earnings disappointments by Walt Disney and other big companies.
The Standard & Poor’s 500 index slipped 0.90 of a point, or 0.04 percent, to 2,474.02. The Dow Jones industrial average slid 36.64 points, or 0.2 percent, to 22,048.70. Earlier, the average had been down more than 88 points.
The Nasdaq composite lost 18.13 points, or 0.3 percent, to 6,352.33. The Russell 2000 index of smaller-company stocks gave up 13.20 points, or 0.9 percent, to 1,396.95. That’s the index’s lowest level in two months.
Consumer-focused stocks, media companies and banks accounted for much of the market decline. They outweighed gains in health care stocks and elsewhere. Smallcompany stocks fell more than the rest of the market.
Investors’ unease over escalating tensions between the U.S. and North Korea had weighed on stocks earlier in the day, pushing gold and bond prices slightly higher. But by the end of the day, traders appeared to take the geopolitical drama in stride.
“Right now the market is viewing it as a lot of saberrattling and a lot of smoke, but not much fire,” said Darrell Cronk, president of Wells Fargo Investment Institute.
The stage was set for the U.S. indexes to go lower early Wednesday as investors around the world reacted to the rising war of words between the U.S. and North Korea, pushing global market indexes lower.
On Tuesday, President Donald Trump warned North Korea of “fire and fury” in response to recent threats from Pyongyang, which said it was examining plans for attacking Guam, a U.S. territory in the Pacific with a military base. Trump’s comments followed reports that the North has mastered a technology needed to strike the United States with a nuclear missile.
Investors reacted by driving up the price of gold and bonds, traditional safe investments. But the moves were modest.
Gold rose $16.70, or 1.3 percent, to settle at $1,279.30 an ounce.
Bond prices rose. The yield on the 10-year Treasury note slipped to 2.25 percent from 2.26 percent late Tuesday.
While the tough talk about the potential for war is scary, investors have heard it many times before.
“North Korea was fodder for the overnight trade, and as we headed into today we haven’t seen any more saber-rattling,” said JJ Kinahan, chief market strategist at TD Ameritrade. “I would expect the markets to react again pretty negatively to any more tough talk from either side, but for now, everybody seems to have settled down, and we’ll see what happens.”
Outside of geopolitical concerns, disappointing company earnings and outlooks put traders in a selling mood.
Priceline Group slid 6.9 percent after the online travel booking service issued a profit forecast that was weaker than analysts were expecting. The stock lost $142.20 to $1,906.80.
Disney dropped 3.9 percent, its biggest single-day loss in more than a year, after the media giant reported a weak quarter and said it would pull its movies from Netflix and start two of its own video streaming services. The stock fell $4.15 to $102.83. Netflix also fell, giving up $2.58, or 1.4 percent, to $175.78.
Benchmark U.S. crude rose 39 cents to settle at $49.56 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, gained 56 cents to $52.70 in London.