U.S. Stocks Waver as Banks Fall But Smaller Companies Climb

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(AP Photo/Seth Wenig, File)

U.S. stocks indexes are mixed Thursday as weak results from banks are partly canceled out by gains for smaller and more domestically-focused companies. Disney and Comcast both rose after Comcast ended its bid to buy most of Twenty-First Century Fox. In testimony before Congress, representatives of the auto industry are speaking out against tariffs on imported cars and car parts proposed by the Trump administration.

KEEPING SCORE: The S&P 500 index slid 5 points, or 0.2 percent, to 2,809 as of 1:45 p.m. Eastern time. The Dow Jones Industrial Average fell 92 points, or 0.4 percent, to 25,106. The Nasdaq composite gave up 12 points, or 0.2 percent, to 7,842. The Russell 2000 index of smaller-company stocks recovered from an early slide and rose 8 points, or 0.5 percent, to 1,700. Retailers did especially well. More stocks rose than fell on the New York Stock Exchange.

EARNINGS: Second-quarter results and forecasts from U.S. companies continued to dominate trading. EBay slumped 7.5 percent to $35.12 after reporting revenue that missed forecasts.

American Express fell 2.8 percent to $100.07 after setting aside more money to cover potential bad loans. AmEx also saw its delinquency rate rise. That could mean that some of American Express’ customers, typically the most creditworthy, are struggling to pay their bills. Bank of New York Mellon lost 5.8 percent to $52.43.

Companies that make heavy machinery and industrial products continued a strong run. Manufacturing company Dover climbed 4 percent to $77.17 and tool and diagnostic equipment maker Snap-on picked up 7.1 percent to $169.48.

Those companies have been hit hard as investors worried that tariffs will hurt their business, but Lindsey Bell, investment strategist with CFRA, said industrials have done very well this quarter. She said many of the companies are raising their profit forecast and plan to increase their spending. However, Bell said it’s possible the companies are trying to avoid the effects of the tariffs and that they’ll see a slowdown later this year.

AUTO TARIFFS: Representatives of manufacturers, suppliers and car dealers are in Washington Thursday along with foreign diplomats to testify at a Congressional hearing, seeking to head off the Trump administration’s proposed tariffs on imported cars and car parts. The European Union said it was already preparing measures to retaliate.

The U.S. imported $335 billion in autos and parts in 2017, so those tariffs could dwarf the taxes the administration has placed on imported steel, aluminum, and goods from China.

General Motors slid 1.1 percent to $39.46 and Tesla dipped 0.7 percent to $321.58. Auto parts retailer BorgWarner lost 1.5 percent to $45.33.

THE QUOTE: Bell said most consumers haven’t noticed the effects of the tariffs yet, but that will change if cars are taxed.

“It will significantly increase the price of a car and the consumer will definitely pull back,” she said, adding that foreign automakers with factories in the U.S. might move those jobs overseas.

“There’s a lot of jobs that could be lost if their tariffs go through,” she said.

TRUMP DUMPS ON FED: President Donald Trump told CNBC he is “not happy” the Federal Reserve has been raising interest rates. It’s rare for presidents to criticize the Fed, and Trump suggested he wouldn’t try to get involved in its decision-making. Still, after his remarks the dollar also gave up most of its gains from earlier in the day. It fell to 112.23 yen from 112.84 yen. The euro rose to $1.1668 from $1.1646.

CHANNEL CHANGER: Cable and internet provider Comcast said it won’t make another bid for Twenty-First Century Fox’s entertainment business and will instead focus on trying to buy European operator Sky. Comcast had offered as much as $66 billion in cash for those businesses, but Disney topped it with a bid of $71 billion in cash and stock. Fox shareholders are scheduled to vote on Disney’s offer next week.

Comcast gained 2.9 percent to $35.03 while Fox fell 1.2 percent to $46.13. Disney gained 2 percent to $112.90, and in London, shares of Sky fell 1.5 percent.

CANNED: Aluminum producer Alcoa sank 11.8 percent to $42.28 after it forecast a smaller pre-tax profit. It said the tax on imported aluminum is costing it $12 million to $14 million a month. Century Aluminum skidded 9.7 percent to $13.45.

DRUGMAKER DOWNTURN: Companies that make and distribute drugs fell after the Trump administration proposed changes to government rules on drug price rebates. AbbVie fell 5 percent to $89.72 and drugstore and pharmacy benefits manager CVS Health shed 1.4 percent to $66.95.

BONDS: Bond prices edged lower. The yield on the 10-year Treasury note fell to 2.84 percent from 2.87 percent.

COMMODITIES: Benchmark U.S. crude rose 1.4 percent to $69.72 per barrel in New York. Brent crude, used to price international oils, fell 0.8 percent to $72.33 per barrel in London.

Gold fell 0.3 percent to $1,224 an ounce and silver fell 1.1 percent to $15.40 an ounce. Copper dropped 2.3 percent to $2.70 a pound.

OVERSEAS: Germany’s DAX fell 0.6 percent, as did France’s CAC 40. Britain’s FTSE 100 added 0.1 percent.

Asian markets finished mostly lower with Japan’s Nikkei 225 losing 0.1 percent and South Korea’s Kospi shed 0.3 percent. Hong Kong’s Hang Seng fell 0.4 percent.

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