Rally Fades as Banks Lead Stocks Lower; Dollar Still Rising

Traders  on the floor of the New York Stock Exchange on Wednesday. (Reuters/Brendan McDermid)
Traders on the floor of the New York Stock Exchange on Wednesday. (Reuters/Brendan McDermid)

U.S. stocks are slightly lower Wednesday as banks return some of the huge gains they’ve made since the presidential election last week. The dollar continues to appreciate against other currencies and has reached its highest mark in 13 years. The price of oil is up further after a big rise the day before.

KEEPING SCORE: The Dow Jones Industrial Average slid 85 points, or 0.5 percent, to 18,838 as of 1:15 p.m. Eastern. The Standard & Poor’s 500 index fell 7 points, or 0.3 percent, to 2,173. The Nasdaq composite picked up 13 points, or 0.3 percent, to 5,288. The Dow has risen for seven days in a row through Tuesday and is up 5.8 percent over that time. The S&P 500 and Nasdaq have also made large gains.

BANKS SLIDE: Banks took the biggest losses in early trading. JPMorgan Chase fell $1.86, or 2.3 percent, to $77.78 and Morgan Stanley lost 95 cents, or 2.4 percent, to reach $39.06 while Zions Bancorp fell $1.59, or 4.1 percent, to $37.17. The S&P 500’s financial stock index has jumped 11 percent since the presidential election.

CURRENCIES: The ICE U.S. Dollar Index, which measures the dollar against six other currencies, rose to 100.38, its highest level since April of 2003. The dollar is rising in part because investors think the Federal Reserve will raise interest rates at a faster pace in response to inflation stemming from the increased spending that President-elect Donald Trump has proposed.

A stronger dollar hurts U.S. companies that do a lot of business overseas because it makes their products more expensive, and it affects their earnings when they are translated from other currencies back into U.S. dollars. However it makes imported goods cheaper for consumers in the U.S.

The dollar slipped 109.20 Japanese yen from 109.32 yen late Tuesday. The euro slid to $1.0695 from $1.0718.

STAY ON TARGET: Retailer Target raised its profit forecast and its sales projections for the third quarter with the holiday season approaching. That came as the retailer gave a strong third-quarter report, as it put more emphasis on low prices after it stumbled in the second quarter. The stock gained $5.44, or 7.6 percent, to reach $76.88.

TJX, the parent of TJ Maxx and Marshalls, reported a bigger profit and better sales than investors expected and its stock rose $2.54, or 3.5 percent, to $76.03. That helped lead consumer stocks a bit higher.

LOWE’S LOWER: Home improvement retailer Lowe’s fell $2.51, or 3.6 percent, to $66.54. The company said traffic in stores was low during the third quarter, and Lowe’s reported a smaller third-quarter profit because of big charges connected to the end of its Hydrox joint venture, write-downs of canceled projects, and goodwill and impairment charges. Its rival Home Depot traded lower Tuesday after its quarterly report.

TECH RESET: Technology companies also moved upward as they continued a rally from a day earlier. Scientific instrument maker Agilent picked up $1.11, or 2.4 percent, to $46.51 after a strong earnings report, graphics processor maker Nvidia rose $5.38, or 6.2 percent, to $91.57 after it announced a collaboration with Microsoft, and Apple picked up $2.39, or 2.2 percent, to $109.50.

Tech stocks had weakened since the election. Trump’s policies might affect their sales in China and other key markets, and a big surge this summer had brought some technology stocks to all-time highs.

INDUSTRIALS: Defense contractors Lockheed Martin declined $3.84, or 1.4 percent, to $262.09 and General Dynamics fell $2.25, or 1.3 percent, to $165.77. Airlines also traded lower after some hefty gains on Tuesday.

OIL: Oil prices were mixed. Benchmark U.S. crude picked up 11 cents to $45.92 per barrel in New York. Brent crude, which is used to price international oils, remained at $46.95 a barrel in London. The price of U.S. crude oil soared 5.7 percent on Tuesday as investors hoped the oil-producing OPEC countries will agree to a production cut that would boost prices.

Energy companies fell. They had rallied on Tuesday along with the price of crude oil.

BONDS: Bond prices were little changed. The yield on the 10-year Treasury note remained at 2.22 percent. Bond yields, which are used to set interest rates on many kinds of loans including mortgages, have risen to their highest levels since the beginning of the year as investors expect inflation to rise. Bond investors hate inflation because it erodes the value of the fixed interest payments that bonds pay.

MARKETS OVERSEAS: In Germany the DAX lost 0.7 percent while France’s CAC 40 was off 0.8 percent. Britain’s FTSE 100 slid 0.6 percent. Asian markets finished mostly higher. Japan’s Nikkei jumped 1.1 percent and the Kospi in Seoul, South Korea gained 0.6 percent. Hong Kong’s Hang Seng index closed 0.2 percent lower.

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