Stocks fall; Dow erases 2017 gains
The Dow Jones industrial average erased its 2017 gains Thursday as it fell for the fifth day in a row, part of a pullback for stock indexes as Treasury yields continued their upward march.
Losses were widespread. Utilities, real estate investment trusts and others that pay big dividends were among the hardest hit because their payouts look less attractive when bond yields are rising. Small-company stocks took outsized losses; the Russell 2000 index sank 0.9%, turning lower for 2017.
Stocks, which took an electrifying jump higher after the election, have slowed in January as investors wait to see what a Donald Trump presidency will really mean.
Even with all the uncertainties, the market has remained relatively calm. The Standard & Poor’s 500 index hasn’t swung by 1%, either up or down, since early December. And the VIX index, which market pros use to gauge how nervous investors are, is still about 50% lower than a year ago.
Bond yields continued their march higher after more economic reports joined the recently growing pile of encouraging data. The 10-year Treasury yield rose to 2.47% from 2.43%.
One of Thursday’s reports showed that the number of workers seeking unemployment claims fell last week to its lowest level in more than 43 years, a sign corporate layoffs are subsiding. Another report showed that home builders broke ground on more new homes in December, capping a solid 2016 for the industry.
Banks and energy companies, which climbed after the election, traded lower.
Industrial stocks were among the few stocks that did well, as railroad operators surged. CSX led the way, leaping 23.4% to $45.51. That was its best day since 1980. An activist investor is reportedly teaming up with the executive who turned around Canadian Pacific Railway to target CSX.
Netflix jumped 3.9% to $138.41 after the Los Gatos, Calif., video-streaming service reported higher fourthquarter earnings than analysts expected and strong subscriber growth.
Oclaro jumped 16.6% to $9.48 after the San Jose optical communications company forecast strong sales in its fiscal second quarter.
The dollar rose to 114.80 Japanese yen from 113.74 yen, and the euro slipped to $1.0659. The British pound rose to $1.2337 from $1.2284.
Benchmark U.S. crude oil rose 29 cents to $51.37 a barrel. Brent crude rose 24 cents to $54.16 a barrel. Wholesale gasoline fell 1 cent to $1.53 a gallon, heating oil rose 1 cent to $1.62 a gallon and natural gas rose 7 cents to $3.37 per 1,000 cubic feet.
Gold dropped $10.60 to $1,201.50 an ounce, silver fell 27 cents to $17 an ounce and copper was flat at $2.61 a pound.