The News Herald (Willoughby, OH)
U.S. stock indexes pull back from record highs
Banks and other financial companies led a slide in U.S. stocks, erasing some gains from a day earlier.
Banks and other financial companies led a slide in U.S. stocks Thursday, erasing some of the gains from a day earlier, when indexes soared to their latest record highs.
Materials and industrials companies also fell sharply. Energy stocks declined along with the price of crude oil. Utilities and phone company stocks bucked the broader market slide.
Investors mostly focused on the latest batch of company news and earnings reports. Traders had an eye on the Federal Reserve amid growing speculation this week that the central bank will raise interest rates again later this month.
“You have the market wondering if the economy is in fact strong enough for a rate hike at this point,” said Quincy Krosby, market strategist at Prudential Financial. “After the run-up we had yesterday, this is a good excuse for the market to pause.”
The Dow Jones industrial average lost 112.58 points, or 0.5 percent, to 21,002.97. The Standard & Poor’s 500 index fell 14.04 points, or 0.6 percent, to 2,381.92. The Nasdaq composite index slid 42.81 points, or 0.7 percent, to 5,861.22.
Small-company stocks fell more than the rest of the market. The Russell 2000 index gave up 17.97 points, or 1.3 percent, to 1,395.67.
The stock market was coming off its biggest single-day gain in nearly four months.
Bond prices fell, pushing yields higher. The 10-year Treasury yield rose to 2.48 percent from 2.46 percent late Wednesday.
Various Federal Reserve officials have signaled recently that they are closer to supporting another rate hike. Earlier this week, New York Fed President William Dudley said the case for raising interest rates had gotten stronger. That’s helped fuel speculation that the central bank will raise interest rates again this month.
The central bank raised its benchmark interest rate by a quarter-point in December.
That followed a quarter-point increase in December 2015, which was the first hike in nearly a decade. Fed Chair Janet Yellen and two other Fed officials are scheduled to deliver speeches on Friday. Investors will be listening for any hints of what the Fed will do at their next policy meeting later this month.
“While it’s plausible the Fed lets the U.S. economy run hot before acting, the economic backdrop, in our view, warrants a Fed hike in March,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “In a slow-growth, improving environment we think that’s favorable for equities.”
Banks, which investors bid sharply higher Wednesday on hopes that higher interest rates would help them earn more from lending, were the biggest losers Thursday.