Stocks rise as drugmakers jump; gold keeps climbing
U.S. stocks turned higher Wednesday, with drug and consumer companies leading the way. Investors were willing to take a few more risks than the day before, but they remained cautious, and demand for bonds and precious metals stayed high.
Stocks opened lower, and the Dow Jones industrial average fell as much as 127 points early on. Indexes started moving higher midsession and finished at their highest levels of the day. Phone companies, traditionally safe investments, fell after some recent gains. Bond prices were little changed after Tuesday’s surge, which pulled the yields on long-term U.S. bonds to their lowest levels ever recorded.
The day before, investors flocked to bonds and sold off all but the steadiest stocks as they worried about the health of Britain’s financial system. Those fears faded a bit Wednesday, but Kristina Hooper, head of U.S. investment strategies at Allianz Global Investors, said demand for bonds will remain high as the effects of the British vote to leave the European Union ripple through the markets.
“It’s probably safe to assume there will be bouts of continued fear going forward that could drive the yield down even lower than where we’ve already been,” she said.
The Dow Jones industrial average rose 78 points, or 0.4%, to 17,918.62. The Standard & Poor’s 500 index advanced 11.18 points, or 0.5%, to 2,099.73. The Nasdaq composite climbed 36.26 points, or 0.8%, to 4,859.16.
Drugmakers AbbVie and Biogen led healthcare stocks higher after regulators in the European Union approved their drug Zinbryta, a treatment for multiple sclerosis that can be taken just once a month. AbbVie rose 2.3% to $63.37 and Biogen went up 2.3% to $247.48.
Bond prices inched higher and yields fell as investors sought safety. The yield on the 10-year Treasury note slipped to 1.37% from 1.38% and the yield on the 30-year Treasury bond fell to 2.14% from 2.15%. According to Tradeweb, both yields set all-time lows early Wednesday, reaching 1.32% and 2.10%, respectively.
Bond yields have tumbled over the last few months following a weak U.S. jobs report and then the unexpected result of the British referendum to leave the EU. Although the yields on U.S. bonds have fallen, they remain higher than yields from other advanced economies, some of which are negative. The U.S. economy also appears to be in better shape.
Netflix shares fell 3.4% to $94.60 after a Jefferies & Co. analyst said that its U.S. subscriber growth may be slower than expected and that its competition is increasing. He downgraded the stock to “underperform” from “hold” and cut his price target to $80 per share from $120.
Other consumer stocks traded higher, however. Online retailer Amazon rose 1.3% to $737.61 and used car dealership CarMax jumped 5.6% to $50.45.
Phone company stocks were the only sector in the Standard & Poor’s 500 index to trade lower. Frontier Communications pulled the sector to small losses as it declined 2% to $4.88. Phone companies are the best-performing sector on the S&P 500 over the last month.
Nortek, which makes heating and ventilation systems for buildings, agreed to be acquired by Melrose Industries for $86 per share, or $1.4 billion. Nortek stock jumped 38.6% to $86.58.
The price of gold rose $8.40 to $1,367.10 an ounce and silver surged 30 cents, or 1.5%, to $20.20 an ounce. Gold is trading at its highest price since March 2014 while silver is at its highest price since August 2014. Newmont Mining shares rose 2.6% to $41.42 and Harmony Gold climbed 5.4% to $4.32.
Copper fell 3 cents to $2.15 a pound.
Oil prices, which were down earlier in the day, also reversed course. Benchmark U.S. crude closed up 83 cents, or 1.8%, at $47.43 a barrel. Brent crude, used to price international oils, advanced 84 cents, or 1.8%, to $48.80 a barrel.
Gas prices lagged after the U.S. government said stockpiles of gasoline jumped last week. That was a surprise to analysts, as S&P Global Platts said gasoline stockpiles were expected to fall by 900,000 barrels.
The price of wholesale gasoline remained $1.43 a gallon, and companies that refine oil into gas stumbled. Marathon Petroleum slumped 5.9% to $36.50 and Valero Energy fell 2.4% to $48.66. Phillips 66 sank 2% to $76.37.
Heating oil rose 3 cents to $1.47 a gallon. Natural gas rose 2 cents to $2.79 per 1,000 cubic feet.
The British pound continued to weaken. It’s at its lowest in more than 30 years and fell to $1.2922 from $1.3032. The dollar slipped to 101.40 yen from 101.55 yen. The euro rose to $1.1105 from $1.1075.
France’s CAC lost 1.9%, Germany’s DAX shed 1.7% and Britain’s FTSE 100 fell 1.2%. Tokyo’s Nikkei 225 and South Korea’s Kospi each skidded 1.9%. Hong Kong’s Hang Seng index slid 1.2%.
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UPDATES:
2:24 p.m.: This article has been updated with additional information.
1:19 p.m.: This article has been updated with closing prices.
8:55 a.m.: This article has been updated with more recent prices and additional information.
This article was originally published at 7:01 a.m.
