U.S. stocks slipped Tuesday as smaller companies and banks had their biggest drops in the last few months. With stock indexes near record highs, investors moved some money into big-dividend stocks such as real estate companies.
Banks and other financial companies have been climbing over the last two months, but Tuesday they skidded as interest rates moved down. Small, domestically focused companies had their worst day since mid-August as House Republicans began making changes to their tax bill. Those lawmakers’ 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 have fewer ways to reduce their taxes.
“Financials would be a primary beneficiary of a 20% corporate tax rate because they're domestically based and they pay domestic taxes,” said Quincy Krosby, chief market strategist at Prudential Financial.
Although the pace of company earnings reports is slowing, those reports continued to hold sway over parts of the market. Shares of 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 slipped 0.49 of a point to 2,590.64. The Dow Jones industrial average rose 8.81 points to 23,557.23, another record high. The Nasdaq composite fell 18.65 points, or 0.3%, to 6,767.78. The Russell 2000 index tumbled 18.87 points, or 1.3%, to 1,479.09.
Bank stocks fell along with bond yields and interest rates, which have moved lower in the last few days. A decline in those yields and rates reduces the profits banks can make from lending. The yield on the 10-year Treasury note fell to 2.31% from 2.32%.
JPMorgan Chase shares fell 2% to $98.75. U.S. Bancorp declined 2.6% to $53.45. First Financial Bancshares, a smaller, Texas-based bank, slid 2.5% to $44.40.
Red Robin Gourmet Burgers plunged 28.9% to $47.70 after it slashed its profit forecast. It pointed to higher labor costs and said it would temporarily stop opening new locations at the end of its next fiscal year.
Consumer products distributor Core-Mark fell 9.1% 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 climbed 3.2% to $68.95, recovering some of its recent losses. Shopping mall operator GGP soared 16.8% to $22.20. Bloomberg reported that GGP is in talks with Brookfield Asset Management about potentially buying the rest of the company. Its competitor Macerich jumped 8.4% to $58.76.
Real estate, household goods and phone companies have lagged far behind the overall 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.
TripAdvisor plunged 23.2% to a five-year low of $30.35 after its third-quarter revenue fell short of analyst estimates.
Priceline Group sank 13.5% to $1,645.72; it 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. Its competitor Expedia fell 2.7% to $119.61.
Royal Caribbean Cruises, meanwhile, climbed 3.1% to $129.23 after it posted a strong quarter, even though its business was disrupted by three major hurricanes.
Drug maker Mallinckrodt was already trading at all-time lows, and it plunged 35.5% to $20.11 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.
TrueCar dived 35.3% to $10.58 after a issuing a disappointing quarterly report.
Benchmark U.S. crude fell 15 cents to $57.20 a barrel. Brent crude, used to price international oils, fell 58 cents to $63.69 a barrel. A day earlier, oil prices rose about 3% 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 fell 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 fell $5.80 to $1,275.80 an ounce. Silver fell 30 cents to $16.94 an ounce. Copper fell 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%. The CAC 40 in France lost 0.5%. Tokyo's Nikkei 225 jumped 1.7%, and Hong Kong's Hang Seng advanced 1.3%. In Seoul, the Kospi lost 0.2%.