Financial companies lead stocks down; oil rises

By Associated Press

Jan. 12, 2017 2:40 PM PT

Banks and other financial companies led U.S. stocks modestly lower Thursday, wiping out much of the market’s Wednesday gains.

Phone companies, real estate, utilities and healthcare stocks eked out gains. Energy, technology and other stocks that posted big gains in the weeks after the November election lost ground. Hess slumped 4.8% and chipmaker Micron Technology fell 2.1%.

Banks, which moved sharply higher through much of the post-election rally in November and December, were hurt by a drop in bond yields, which can push down interest rates on loans, thereby squeezing banks’ profits.

“The market has been running pretty nicely this year, so this is just a little bit of a pullback, a little bit of a consolidation,” said Troy Logan, managing director at Warren Financial Service. “Anything that has run well post-election has pulled back somewhat today.”

The Dow Jones industrial average slid 63.28 points, or 0.3%, to 19,891. Earlier in the day, the average was down more than 183 points. The Standard & Poor’s 500 index fell 4.88 points, or 0.2%, to 2,270.44. The Nasdaq composite fell 16.16 points, or 0.3%, to 5,547.49, snapping a seven-day winning streak that delivered five consecutive record highs.

The market’s slide came as investors looked ahead to several weeks of companies reporting quarterly results. That begins Friday, when several major banks are due to report earnings, including Bank of America, JPMorgan Chase and Wells Fargo.

The latest drop in bond yields weighed on bank stocks Thursday. The yield on the 10-year Treasury slipped to 2.36% from 2.37%.

Beyond that, some traders may have also been selling bank stocks to lock in the sector’s recent gains before Friday’s earnings releases, Logan said.

“Tomorrow is the big day for a lot of the big banks,” he said. “They’ve run up pretty nicely post-election and through this year.”

PNC Financial Services Group slid 2.4% to $117.93, Zions Bancorporation declined 2.2% to $42.97 and JPMorgan Chase fell 1%, to $86.24.

Companies issuing earnings forecasts also grabbed investors’ attention.

Hess slid 4.8% to $58.85 after the oil company said it will take a $3.8-billion charge in the fourth quarter.

Other companies making news also lost ground.

Mylan fell 1.4% to $36.77 on news that rival CVS slashed its price on a generic version of Adrenaclick, a lesser-known treatment similar to EpiPen, which can cost more than $600. The version that CVS will is selling costs about one-sixth of the price of Mylan’s EpiPen.

Fiat Chrysler tumbled 10.3% to $9.95 after the U.S. government accused the automaker of violating vehicle emission laws. The Environmental Protection Agency said Thursday that Fiat Chrysler failed to disclose software in some of its vehicles with diesel engines that enables them to emit more pollution than allowed under the Clean Air Act.

Markets overseas were mixed.

Germany’s DAX fell 1.1% and France’s CAC 40 slid 0.5% despite new data showing that Eurozone industrial production jumped 1.5% in November. Britain’s FTSE 100 was flat. Japan’s benchmark Nikkei 225 dropped 1.2%. Hong Kong’s Hang Seng fell 0.5% and Australia’s S&P/ASX 200 slipped 0.1%. South Korea’s Kospi bucked the trend to rise 0.6%.

Energy futures closed higher. Benchmark U.S. crude oil rose 76 cents, or 1.5%, to $53.01 a barrel. Brent crude, which is used to price oil sold internationally, advanced 91 cents, or 1.7%, to $56.01 a barrel.

Wholesale gasoline rose 2 cents to $1.61 a gallon and heating oil rose 2 cents to $1.68 a gallon. Natural gas futures rose 16 cents, or 5%, to $3.39 per 1,000 cubic feet.

In currency trading, the dollar fell to 114.63 yen from 115.43 yen. The euro rose to $1.0626 from $1.0576. The British pound slid to $1.2163 from $1.2208; it has been weakening recently amid concern that Britain might break off completely from the European Union’s single market.

The price of gold rose $3.20 to $1,199.80 an ounce. Silver was little changed at $16.83 an ounce. Copper rose 6 cents to $2.67 a pound.

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UPDATES:

2:40 p.m.: This article was updated with closing prices, context and analyst comments.

9:30 a.m.: This article was updated with market prices and context.

This article was originally published at 7 a.m.