Technology and healthcare companies drove a broad slide in U.S. stocks Wednesday, erasing some of the market’s solid gains from Tuesday.
The sell-off marked the second drop for the benchmark Standard & Poor’s 500 index this week and put the Dow Jones industrial average on track to end the month with a loss.
Although U.S. stocks remain on track to finish the quarter with solid gains, investors remain anxious over the slowing global economy and worrisome signals from the bond market.
The yield on the benchmark 10-year Treasury note continued to decline Wednesday, dropping to 2.38% from 2.41% on Tuesday. That remained below the yield on the three-month Treasury bill. When that kind of “inversion” in bond yields occurs, economists fear it may signal a recession within the coming year.
“The S&P 500 attempted to rally right out of the open, but then started to give back ground,” said Jeramey Lynch, global investment specialist at J.P. Morgan Private Bank. “The focus still continues to be on rates, particularly in the lower end of the curve. And with rates still heading down, the market is having a tough time bucking that trend.”
The S&P 500 fell 13.09 points, or 0.5%, to 2,805.37. Even with the latest slide, the index is up 11.9% so far in 2019, an unusually strong start to the year.
The Dow slipped 32.14 points, or 0.1%, to 25,625.59.
The Nasdaq composite fell 48.15 points, or 0.6%, to 7,643.38. The Russell 2000 index of smaller-company stocks fell 5.93 points, or 0.4%, to 1,522.23.
Major European indexes closed mixed. Investors were keeping a close eye on developments in Britain, where lawmakers debated various alternatives for Brexit, the country’s split from the European Union.
Investors also are still waiting to see how the U.S. and China will resolve their costly trade dispute, with high-level talks between Washington and Beijing scheduled to resume Thursday. They’re also looking ahead to the next batch of corporate earnings reports, which start to roll in next week.
Chipmakers were among the big tech-sector decliners. Advanced Micro Devices slid 3.1%. Micron Technology fell 2.7%.
Banks declined along with bond yields, as declines in bond yields cut into lenders’ ability to charge higher interest rates on loans. Bank of New York Mellon fell 1.5%.
Centene declined 5%, leading the slide in health-sector stocks, after it agreed to buy WellCare Health Plans for more than $15 billion. Both companies are big players in the Affordable Care Act market. The deal came two days after the Trump administration attacked the ACA in court, saying that President Obama’s healthcare law should be declared unconstitutional. WellCare Health Plans jumped 12.3%.
Industrial-sector stocks bucked the broader market decline, led by gains in airlines. Southwest Airlines gained 2.2%, Delta Air Lines rose 1.8% and American Airlines Group advanced 2.4%.
Home builders also marched broadly higher, getting help from lower bond yields. Mortgage rates tend to move along with the yield on the 10-year Treasury note, and lower mortgage rates make it easier for would-be buyers to purchase a home.
The sector also got a boost from news that mortgage applications rose sharply last week as the average rate for a 30-year fixed-rate home loan declined from a week earlier.
LGI Homes shares climbed 4.8%. PulteGroup advanced 5.1%.
Shoe Carnival leaped 22.4% after the retailer’s fourth-quarter earnings and revenue exceeded analysts’ forecasts.
Oil and gas futures lost ground. Benchmark U.S. crude fell 0.9% to $59.41 a barrel. Brent crude, used to price international oils, slipped 0.2% to $67.83 a barrel.
Wholesale gasoline slid 3.1% to $1.90 a gallon. Heating oil fell 0.5% to $1.98 a gallon. Natural gas fell 1% to $2.71 per 1,000 cubic feet.
Gold fell 0.3% to $1,310.40 an ounce. Silver fell 0.8% to $15.30 an ounce. Copper rose 0.3% to $2.86 a pound.
The dollar weakened to 110.36 yen from 110.52 yen. The euro fell to $1.1263 from $1.1278.