Tech stocks' slump cancels out bank stocks' rise

By Associated Press

Nov. 14, 2016 3 PM PT

U.S. stocks came back from an early loss and finished almost unchanged Monday. Technology companies such as Apple and Microsoft took big losses on fears about their overseas revenue, but bank stocks continued to surge along with bond yields.

Technology stocks have been weak since last week’s election, and they fell further Monday as investors wonder if Donald Trump’s policies as president will hurt their sales in China and other markets overseas. Bank stocks built on their post-election gains as bond yields continued to rise. That paves the way for banks to make more money from lending. Government bond yields are now at their highest levels since January.

“The market is sniffing out the belief that some of these Trump policies may drive some better economic growth but also may in fact be somewhat inflationary,” said PNC Chief Investment Strategist Bill Stone.

The Dow Jones industrial average rose 21.03 points, or 0.1%, to close at 18,868.69, another all-time high. The Standard & Poor’s 500 index slipped 0.25 of a point to 2,164.20; earlier in the day, it was down as much as 0.4%. The Nasdaq composite sank 18.72 points, or 0.4%, to 5,218.40.

Technology companies fell sharply, with familiar names taking some of the largest losses. Apple sank 2.5% to $105.71, Facebook dropped 3.3% to $115.08 and Microsoft slid 1.5% to $58.12. Alphabet, the parent company of Google, fell 2.4% to $753.22.

Bond prices fell and yields jumped as investors anticipated that Trump’s spending plans would lead to higher inflation and more government borrowing. The yield on the 10-year U.S. Treasury note climbed to 2.25% from 2.14% late Thursday. Bond trading was closed Friday for the Veterans Day holiday. The day before the Nov. 8 election, the yield was 1.83%. That’s a huge move for that benchmark rate.

Goldman Sachs shares rose 2.6% to $209.18, Bank of America jumped 5.6% to $20.08, and JPMorgan Chase went up 3.7% to $79.51.

Stone said investors are focused on potential corporate and individual tax cuts, a “wave of deregulation” that would eliminate some of the rules governing businesses such as energy companies and banks, and more protectionism on trade, which could hurt sales for companies that do a lot of business overseas.

Investors are also pleased by the prospect of looser regulation and bigger profits. For example, Trump’s election could result in big changes to the Dodd-Frank financial reform law and the Consumer Financial Protection Bureau.

Stone added that corporate deal making could increase if Trump’s administration takes a looser approach to antitrust regulation. Several companies announced deals or deal offers Monday.

South Korean conglomerate Samsung said it will buy Harman International for $8 billion, or $112 a share. Harman makes electronics for cars including audio systems and safety and entertainment features. Its stock jumped 25.2% to $109.72.

Shares of communication adapter maker Digi International rose 15% to $13.40 after the company said it received an offer from Belden, a communications equipment company. Digi said it rejected the bid of $13.82 a share, or about $359 million, because it was too low. Belden stock rose 2.2% to $71.22.

The dollar rose against other currencies as U.S. interest rates rose. It jumped to 108.51 Japanese yen from 106.78 yen. The euro fell to $1.0726 from $1.0845.

Investors are also selling companies that pay big dividends such as utilities and phone companies as bonds become more appealing to investors seeking income. Verizon fell 1.1% to $46.18. American Electric Power slid 2.1% to $58.72.

Oil prices bounced back from a big loss early on. Benchmark U.S. crude slipped 9 cents to $43.32 a barrel in New York. Brent crude, used to price international oils, fell 32 cents to $44.43 a barrel in London.

Wholesale gasoline fell 3 cents to $1.28 a gallon. Heating oil fell 2 cents to $1.39 a gallon. Natural gas jumped 13 cents, or 5%, to $2.75 per 1,000 cubic feet.

Gold fell $2.60 to $1,221.70 an ounce. Silver fell 49 cents, or 2.8%, to $16.89 an ounce. Copper rose 1 cent to $2.52 a pound.

France’s CAC 40 rose 0.4% and Germany’s DAX advanced 0.2%. The FTSE 100 index of leading British shares closed up 0.3%. In Japan the Nikkei 225 jumped 1.7% after a strong reading on Japan’s economic growth. The Kospi in South Korea lost 0.5% and Hong Kong’s Hang Seng slid 1.4%.

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UPDATES:

3 p.m.: This article was updated with closing prices, context and analysis.

11:25 a.m.: This article was updated with context and more recent market information.

9 a.m.: This article was updated with more recent market information.

This article was originally published at 7 a.m.