Houston Chronicle

U.S. stocks rise as financial and health care firms finish higher.

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NEW YORK — U.S. stocks mostly rose Monday as financial and health care companies finished higher, while Apple and other technology companies continued to fall. Asian indexes fell following weak economic data in China and a lack of progress in trade negotiatio­ns between the U.S. and China.

Warren Buffett’s Berkshire Hathaway, which owns Geico and other insurance businesses, led the rally in financial stocks after it reported strong results over the weekend. Drugmakers including Eli Lilly also climbed. Apple took another sharp loss, which knocked the tech giant’s market value below the $1 trillion mark.

Real estate companies, utilities and other high-dividend stocks finished with solid gains as high-growth stocks like tech and internet companies slipped. Smaller and more U.S.-focused companies also lagged.

Big technology companies and small companies were both hit hard during the market’s slump in October. Tech companies fell as investors worried about the trade dispute and about an increase in interest rates, which could erode their future profits. Smaller companies are vulnerable to higher interest rates because they tend to carry more debt.

Earnings for S&P 500 companies are on track to grow about 20 percent this year, and analysts expect company profits to grow another 10 percent next year, according to FactSet. But Jim Paulsen, chief investment strategist for the Leuthold Group, said that might be too optimistic because costs and interest rates are rising and global economic growth could slip.

“It’s a double whammy of slowing sales at the same time we may be starting to (see pressure on) profit margins,” he said.

Paulsen said corporate earnings could fall next year, and smaller companies might have a hard time dealing with that.

The S&P 500 index added 15.25 points, or 0.6 percent, to 2,738.31. The Dow Jones Industrial Average rose 190.87 points, or 0.8 percent, to 25,461.70.

The Nasdaq composite sank 28.14 points, or 0.4 percent, to 7,328.85. The Russell 2000 index of smaller-company stocks slipped 0.47 point to 1,547.51.

Stocks plunged in October, but last week was the market’s best since March. One reason for that recovery was increased optimism about trade talks, as Chinese officials and President Donald Trump said a phone conversati­on with China’s President Xi Jinping had gone well. On Monday, Xi promised to reduce costs for importers and raise consumer spending power, but he did not address the technology policy dispute between the U.S. and China, a critical part of the trade impasse.

Berkshire Hathaway said its profit quadrupled in the third quarter as the value of its investment­s climbed. Berkshire bought back almost $1 billion in stock during the quarter. Other insurers and banks also rose.

Apple lost another 2.8 percent to $201.59. The stock tumbled Friday following a weak fourth-quarter forecast. Apple also said it will stop announcing how many iPhones it sold each quarter. Daniel Ives of Wedbush said it’s intended to get investors to see the company as a services provider and not just a device seller.

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