Stocks that pay big dividends rise in a day of quiet trading

By Associated Press

Dec. 19, 2016 2:25 PM PT

With the Christmas holiday and the end of 2016 coming into view, U.S. stocks edged higher Monday as bond yields dropped and investors who sought income moved money into phone company and real estate stocks.

Technology and industrial companies rose, while energy companies skidded and healthcare stocks continued to lag behind the rest of the market. Disney climbed after a strong opening weekend for “Rogue One: A Star Wars Story,” its second movie in the revived “Star Wars” franchise.

Trading volume was the lowest since mid-October, except for the abbreviated trading session after the Thanksgiving holiday. Stocks were on track for larger gains early in the day and the Nasdaq was briefly on pace for a record high, but investor enthusiasm waned by the afternoon.

David Lefkowitz, senior equity strategist at UBS Wealth Management Americas, said that stocks have surged since the presidential election and that investors might be more cautious in the weeks to come as they wait for details of President-elect Donald Trump’s policy agenda.

“We’re going to have to move from the grand vision of things to actually getting some of these policies done,” he said.

Bond yields have surged to multi-year highs in recent days, but they moved lower Monday. That helped companies that pay large dividends, as they are often compared to bonds and are more appealing to investors when bond yields fall.

The Dow Jones industrial average rose 39.65 points, or 0.2%, to 19,883.06. The Standard & Poor’s 500 index advanced 4.46 points, or 0.2%, to 2,262.53. The Nasdaq composite climbed 20.28 points, or 0.4%, to 5,457.44. The Russell 2000 index of small-company stocks rose 7.49 points, or 0.5%, to 1,371.68.

Bond prices rose. The yield on the 10-year Treasury note slid to 2.54% from 2.60% late Friday. That sent interest rates lower, and it affects the profits banks make from mortgages and other loans. Bank stocks lagged behind the overall market.

Income-seeking investors turned their attention to groups of stocks that pay large dividends, similar to bonds. That sparked gains for real estate, phone and utility companies. Healthcare facility investor HCP climbed 4% to $30.30 and power company NRG Energy jumped 4.5% to $12.85.

Government bond yields have climbed over the last few months and have jumped since the election. Last week the yield on the 10-year note rose to its highest level in more than two years.

Both technology and industrial stocks are trading around all-time highs and continued to rise Monday. Microsoft went up 2.1% to $63.62 and software maker Adobe advanced 1.7% to $105.29. Industrial companies also did better than the broader market. Boeing rose 1.1% to $156.18. United Technologies, which makes elevators, jet engines and other products, went up 2.1% to $110.82.

Crude oil inched up 22 cents to $52.12 a barrel. Brent crude, the international standard, fell 29 cents to $54.92 a barrel. Energy companies took small losses. They’re trading at their highest prices in about 18 months after a big six-week rally. Noble Energy fell 2.2% to $40.25 and Baker Hughes declined 1% to $65.73.

Disney climbed 1.3% to $105.30 after “Rogue One: A Star Wars Story” brought in an estimated $155 million in worldwide ticket sales in its first weekend. That was better than expected and the second-best December movie opening ever, after “Star Wars: The Force Awakens” last year.

Insurance company Allied World Assurance will be bought by Fairfax Financial Holdings of Canada for $54 a share in cash and stock, or $4.7 billion. Its stock jumped 13.1% to $51.76.

Electronic trading firm Virtu Financial slid 4% to $15.55 after President-elect Trump said he plans to nominate the company’s founder and chairman, Vincent Viola, for the position of secretary of the Army.

Viola, an Army veteran, is a former chairman of the New York Stock Exchange and owns the NHL’s Florida Panthers. He’s the second head of a publicly traded company expected to take a role in Trump’s administration, following Rex Tillerson, the chief executive of Exxon Mobil, who has been nominated for secretary of State.

Former World Wrestling Entertainment CEO Linda McMahon and CKE Restaurants CEO Andy Puzder are also expected to join the administration, as are Goldman Sachs President Gary Cohn and billionaire investor Wilbur Ross.

Virtu went public last April in an initial public offering priced at $19 a share. Its market capitalization is around $600 million.

The dollar fell to 117.24 yen from 118.01 yen late Friday. The euro fell to $1.0404 from $1.0433.

Gold rose $5.30 to $1,142.70 an ounce. Silver fell 13 cents to $16.09 an ounce. Copper sank 7 cents, or 2.5%, to $2.50 a pound.

Wholesale gasoline rose 1 cent to $1.56 a gallon. Heating oil remained at $1.67 a gallon. Natural gas fell 2 cents to $3.39 per 1,000 cubic feet.

The FTSE 100 index in Britain advanced 0.1% while Germany’s DAX rose 0.2%. In France the CAC-40 was down 0.2%. Japan’s benchmark Nikkei 225 index edged down 0.1% while in South Korea the Kospi slipped 0.2% and Hong Kong’s Hang Seng shed 0.9%.

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UPDATES:

2:25 p.m.: This article was updated with closing prices, context and analyst comment.

8:05 a.m.: This article was updated with market prices and context.

This article was originally published at 6:50 a.m.