Stocks Fade, Finish Lower 10/15 15:51
After a wobbly day of trading, U.S. stocks fell for the seventh time in
eight days Monday as technology companies continued to slide.
NEW YORK (AP) -- After a wobbly day of trading, U.S. stocks fell for the
seventh time in eight days Monday as technology companies continued to slide.
Industrial and high-dividend companies rose, and the market's losses were
limited relative to the steep losses it suffered last week.
Stocks opened lower and repeatedly switched between small gains and losses
before falling in the last hour of trading. Along with technology companies,
health care and energy stocks and retailers also fell as the companies that
have led the U.S. market higher this year continued to struggle.
Defense contractors L3 and Harris made the biggest gains on the S&P 500
after announcing a deal to combine. Smaller companies fared better than the
rest of the market and finished broadly higher.
Jason Pride, chief investment officer for private clients at Glenmede, said
that investors expect many years of powerful profit growth from
technology-oriented companies like Apple, Amazon and Netflix. Over the last two
weeks, Wall Street has started considering the possibility that interest rates
will rise more quickly, taking a bigger chunk out of those critical future
"The more the company's valuation is dependent on some profit way ahead in
time as opposed to the profits coming today, the more rate hikes should impact
the valuation of that company," he said. Pride said the recent downturn is a
healthy development for stocks.
"A five to 10 percent pullback of that magnitude is very normal and very
reasonable for this market to go through," he said.
The S&P 500 index lost 16.34 points, or 0.6 percent, to 2,750.79. The Dow
Jones Industrial Average retreated 89.44 points, or 0.4 percent, to 25,250.55.
The Nasdaq composite skidded 66.15 points, or 0.9 percent, to 7,430.74. The
Russell 2000 index of smaller-company stocks added 6.42 points, or 0.4 percent,
The S&P 500 lost 4.1 percent last week, its third weekly loss in a row and
its biggest since late March, as investors worried about rising interest rates
and trade tensions between the U.S. and China.
The technology companies that have led the market higher in recent years,
including some of the world's most valuable companies, continued to decline.
Apple gave up 2.1 percent to $217.36 and chipmaker Nvidia slipped 3.4 percent
Netflix, which is scheduled to report its third-quarter results late
Tuesday, fell 1.9 percent to $333.13. It's fallen 20.5 percent since disclosing
weak user growth three months ago.
Harris and L3 are combining to form L3 Harris Technologies, which will have
annual sales of about $16 billion. That would make it the sixth-largest U.S.
defense contractor and one of the top 10 globally. L3 gained 12.8 percent to
$220.91 and Harris rose 11.9 percent to $173.25.
Bank of America's third-quarter profit and revenue were better than analysts
expected, but Wall Street was disappointed with the company's loan growth. The
company has emphasized responsible growth recently, and like other banks, it's
benefiting from last year's corporate tax cut and rising interest rates. Its
stock slipped 1.9 percent to $27.92.
Bond prices edged lower. The yield on the 10-year Treasury note rose to 3.16
percent from 3.14 percent late Friday.
Rising bond yields often lead to losses for high-dividend companies because
many investors think of them as alternatives to bonds. That pattern hasn't held
up in the last few days as investors have been looking for relatively safe
picks on the stock market.
Germany's DAX jumped 0.8 percent and the FTSE 100 in Britain rose 0.5
percent. France's CAC 40 fell less than 0.1 percent.
Japan's benchmark Nikkei 225 dipped 1.9 percent and the South Korean Kospi
edged down 0.8 percent. Hong Kong's Hang Seng fell 1.5 percent.
Global stock indexes have been struggling this year as investors move money
to the U.S. and out of Europe and Asia in response to faster economic growth in
the U.S. and rising trade tensions. The losses the last few weeks for global
markets have made it even worse.
The Hang Seng index in Hong Kong has fallen 22 percent since early January,
meeting Wall Street's definition of a "bear market," or a decline of 20 percent
from a recent peak. A number of other indexes have fallen at least 10 percent,
known as a "correction." Those include the DAX and Kospi, which both peaked in
late January, and the FTSE 100, the Ibex in Spain and the FTSE MIB in Italy,
which peaked in May.
U.S. crude rose 0.6 percent to $71.78 a barrel in New York. Brent crude, the
standard for international oil prices, added 0.4 percent to $80.78 a barrel in
London. Natural gas prices continued to surge as the weather in the U.S. grew
colder. They rose 2.6 percent to $3.24 per 1,000 cubic feet and have climbed
almost 8 percent in October to reach their highest price since January.
Wholesale gasoline edged up 0.1 percent to $1.94 a gallon and heating oil
added 0.2 percent to $2.33 a gallon.
In another sign investors were nervous about stocks, gold rose 0.7 percent
to $1,230.30 an ounce and silver picked up 0.6 percent to $14.73 an ounce.
Copper lost 0.4 percent to $2.79 a pound.
The dollar fell to 111.88 yen from 112.01 yen. The euro rose to $1.1584 from