Wall Street stumbles as bond yields rise, health stocks fall
Traders work on the floor of the New York Stock Exchange January 26, 2018. — Reuters picTraders work on the floor of the New York Stock Exchange January 26, 2018. — Reuters picNEW YORK, Jan 31 — US stocks fell for a second straight day yesterday, with the Dow registering its biggest two-day drop since September 2016, pressured by healthcare stocks and rising bond yields.
The Dow also had its biggest daily percentage decline since May 2017 and the day’s 1.37-per-cent fall was the second-biggest single-day drop since the election of Donald Trump, slated to give his first State of the Union speech later yesterday.
US Treasury yields climbed to multi-year highs after the start of the Federal Reserve’s two-day meeting, which could shed light on the central bank’s economic and rate hike outlook.
“Investors are catching up to the fact that rates have risen,” said Jonathan Mackay, investment strategist at Schroders in New York. “The market’s finally catching up.”
The selloff set traders in the options market fretting about a near-term shock to equities and the Cboe Volatility Index, the most widely followed barometer of expected near-term stock market gyrations, closed up 0.95 points at 14.79, its highest close since Aug. 17.
Healthcare stocks pulled the major indexes lower on news that Amazon.com Inc, Berkshire Hathaway Inc and JPMorgan Chase & Co will jointly form a healthcare company to help control costs for their US employees.
The S&P 500 Healthcare index was the day’s biggest loser among the 11 major sectors, dropping by 2.13 per cent.
The Dow Jones Industrial Average fell 362.59 points, or 1.37 per cent, to 26,076.89, the S&P 500 lost 31.1 points, or 1.09 per cent, to 2,822.43 and the Nasdaq Composite dropped 64.02 points, or 0.86 per cent, to 7,402.48.
“Investors are getting a bit worried about inflation which has led some people to believe that the Fed might be more aggressive when it comes to raising rates,” said Robert Pavlik, chief investment strategist at SlateStone Wealth.
MetLife Inc fell 8.6 per cent and was the day’s biggest daily percentage decliner in the S&P 500 after news the US Securities and Exchange Commission was investigating the insurer’s failure to pay some workers’ pensions.
UnitedHealth Group Inc was the biggest drag on the Dow, falling 4.3 per cent. Pfizer Inc was down 3.1 per cent despite its better-than-expected earnings and upbeat 2018 guidance.
Harley-Davidson Inc closed down 8.0 per cent after announcing it would close a Kansas City plant in the face of declining shipments.
Apple Inc declined for a second day, falling 0.6 per cent on news that the US Department of Justice and the Securities and Exchange Commission are investigating the company’s disclosure that it slowed older iPhones with flagging batteries.
Earnings so far have been stronger than expected. S&P 500 earnings growth is now forecast at 13.2 per cent, up from 12 per cent a month ago. Among companies that have reported so far, 80 per cent are exceeding analysts’ expectations, according to Thomson Reuters data.
Investors will likely scrutinise Trump’s first State of the Union address for clues on trade policy and infrastructure spending.
Declining issues outnumbered advancing ones on the NYSE by a 4.17-to-1 ratio; on Nasdaq, a 2.98-to-1 ratio favoured decliners.
The S&P 500 posted 17 new 52-week highs and four new lows; the Nasdaq Composite recorded 41 new highs and 43 new lows.
Volume so far on US exchanges was 8.1 billion shares, compared with the 7.1 billion average for the full session over the last 20 trading days. — Reuters
Source: The Malay Mail Online
