Stocks indexes settle down, but small companies drop again
NEW YORK—U.S. stocks wobbled Thursday as the markets turned fairly quiet after a very turbulent start to the week. Small companies dropped and high-dividend stocks, which investors favor when they want to reduce risk, rose.
Major stock indexes spent the day switching between small gains and losses after several days of much bigger moves. Clothing companies and other retailers fell, weighed down by weak earnings reports, and a disappointing forecast from Delta hurt airlines.
Chemical and basic materials makers also sank. Investors shifted some money into high-dividend stocks including utilities, household goods makers and real estate investment trusts.
Trading has been jagged over the last few months as investors worried about growing trade tensions and rising interest rates. Mona Mahajan, U.S. investment strategist for Allianz Global Investors, said traders aren’t sure what strategy to use right now: many recent market favorites, including Facebook, Amazon, Netflix and Google, have taken a beating. Yet the global economy is still growing, making high-dividend, low-growth stocks like utilities feel like a strange choice, she said.
The European Central Bank said it will end its bond-buying stimulus program at the end of the year, but trimmed its forecasts for growth across Europe. The bank isn’t ending its stimulus program entirely, as it will continue to invest money from maturing bonds and will take other steps to encourage banks to lend money.
The S&P 500 index lost 0.53 points to 2,650.54. The Dow Jones Industrial Average added 70.11 points, or 0.3 percent, to 24,597.38 as McDonald’s and Procter & Gamble rose. The Nasdaq composite fell 27.98 points, or 0.4 percent, to 7,070.33.
The Russell 2000 index of smaller companies fell 22.62 points, or 1.6 percent, to 1,432.70. The Russell has fallen 17.7 percent since setting a record high in late August and is trading at its lowest level since September 2017.
Among other issues, that reflects investors’ fears about slowing economic growth in the U.S. and rising interest rates. Smaller companies are more vulnerable in times of slower growth, and they tend to carry higher levels of debt than larger companies do. Higher rates make those debts more costly.
The Federal Reserve has been steadily raising interest rates for three years and is letting its balance sheet shrink, and the Bank of England is also backing away from the stimulus efforts it employed following the global financial crisis of 2007-2009 and the Great Recession.
Oil prices climbed following a Bloomberg News report that Saudi Arabia plans to cut exports to the U.S. The Senate also passed a resolution recommending the U.S. end its assistance to the kingdom for the war in Yemen, and also blamed Saudi Crown Prince Mohammed bin Salman for the killing of journalist Jamal Khashoggi. The resolution may not become law, but could increase tensions between Saudi Arabia and the U.S.
Benchmark U.S. crude oil jumped 2.8 percent to $52.58 per barrel in New York. Brent crude, the international standard, rose 2.2 percent to $61.45 per barrel in London.
Wholesale gasoline climbed 4.1 percent to $1.48 a gallon and heating oil rose 1.4 percent to $1.88 a gallon. Natural gas slipped 0.3 percent to $2.12 per 1,000 cubic feet.