U.S. stocks slipped Tuesday as smaller companies and banks took their worst losses in a few months. With stock indexes near record highs, investors moved some money into big-dividend stocks like real estate companies.
Banks and other financial companies have been climbing over the last two months, but Tuesday they skidded as interest rates moved lower. Small, domestically-focused companies had their worst day since mid-August as House Republicans began making changes to their tax bill. Their Senate counterparts are expected to introduce their own bill soon. Smaller companies tend to pay higher tax rates than their bigger peers because they make more of their money in the U.S. and don’t have as many ways to reduce their taxes.
“Financials would be a primary beneficiary of a 20 percent corporate tax rate because they’re domestically based and they pay domestic taxes,” said Quincy Krosby, chief market strategist at Prudential Financial.
While the pace of company earnings is slowing, they continued to hold sway over parts of the market. Travel booking companies TripAdvisor and Priceline both plunged while Weight Watchers continued to surge after it raised its forecasts for the year. The weight loss company has more than quadrupled in value this year.
The Standard & Poor’s 500 index dipped 0.49 points to 2,590.64. The Dow Jones industrial average added 8.81 points to 23,557.23, another record high. The Nasdaq composite fell 18.65 points, or 0.3 percent, to 6,767.78. The Russell 2000 index tumbled 18.87 points, or 1.3 percent, to 1,479.09.
Banks fell along with bond yields and interest rates. Both have moved lower over the last few days, which reduces the profits banks make from lending. The yield on the 10-year Treasury note slipped to 2.31 percent from 2.32 percent.
JPMorgan Chase fell $2.03, or 2 percent, to $98.75 and U.S. Bancorp lost $1.40, or 2.6 percent, to $53.45. First Financial Bancshares, a smaller, Texas-based bank, fell $1.15, or 2.5 percent, to $44.40.
Red Robin Gourmet Burgers plunged after it slashed its profit forecast. It pointed to higher labor costs and said it will temporarily stop opening new locations at the end of its next fiscal year. The stock lost $19.35, or 28.9 percent, to $47.70. Consumer products distributor Core-Mark fell $3.07, or 9.1 percent, to $30.63 after it cut its outlook.
Household goods makers, utilities, and other companies that pay big dividends did better than the rest of the market. Drugstore and pharmacy benefits company CVS Health jumped $2.15, or 3.2 percent, to $68.95 to recover some of its recent losses. Shopping mall operator GGP soared $3.19, or 16.8 percent, to $22.20. Bloomberg reported that GGP is in talks with Brookfield Asset Management about potentially buying the rest of the company. Competitor Macerich jumped $4.57, or 8.4 percent, to $58.76.
Real estate, household goods and phone companies have lagged far behind the S&P 500 this year. The stocks are generally seen as cautious investments, and investors look for them when they are worried about market volatility. But investors have been betting on improved economic growth rather than looking for safety.
Travel website TripAdvisor plunged after its third-quarter revenue fell short of analyst estimates. Booking service Priceline Group had a better-than-expected quarter, but its forecasts for the current quarter disappointed Wall Street. Analysts said the company is spending a lot of money on advertising, but that may pay off with increased market share. TripAdvisor sank $9.18, or 23.2 percent, to a five-year low of $30.35 while Priceline lost $257.28, or 13.5 percent, to $1,645.72. Expedia shed $3.37, or 2.7 percent, to $119.61.
However, Royal Caribbean Cruises jumped $3.89, or 3.1 percent, to $129.23 after it had a strong quarter even though its business was disrupted by three major hurricanes.
Drugmaker Mallinckrodt plunged after it said sales of its costly HP Acthar gel have been hurt because fewer prescriptions are being filled. It said revenue from the drug will decline in the fourth quarter. The company also reported weaker sales of generic drugs. Already trading at all-time lows, the stock dropped $11.07, or 35.5 percent, to $20.11.
Benchmark U.S. crude fell 15 cents to $57.20 a barrel in New York. Brent crude, used to price international oils, dipped 58 cents to $63.69 a barrel in London. Oil prices rose about 3 percent Monday and hit two-year highs after a wave of arrests of princes and other officials in Saudi Arabia. Investors wondered if the upheaval could affect oil supplies and prices.
Wholesale gasoline lost 1 cent to $1.82 a gallon. Heating oil fell 2 cents to $1.92 a gallon. Natural gas rose 2 cents to $3.15 per 1,000 cubic feet.
Gold lost $5.80 to $1,275.80 an ounce. Silver fell 30 cents to $16.94 an ounce. Copper declined 7 cents to $3.09 a pound.
The dollar rose to 113.87 yen from 113.77 yen. The euro fell to $1.1589 from $1.1606.
European stocks fell. The British FTSE 100 and the German DAX each shed 0.7 percent. The CAC 40 in France lost 0.5 percent. Tokyo’s Nikkei 225 jumped 1.7 percent and Hong Kong’s Hang Seng advanced 1.3 percent. In Seoul, the Kospi lost 0.2 percent.