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Oil and banks lift the Dow to a new record high, but tech stocks dive

The New York Stock Exchange building in lower Manhattan.
(Frank Franklin II / Associated Press)

Technology companies plunged Thursday, and high-dividend stocks took hefty losses as bond yields rose to their highest level in more than a year. But more big gains for blue-chip banking and oil stocks pulled the Dow Jones industrial average to a record high.

Big names such as Facebook and Oracle fell as tech firms took their biggest losses in two months. Rising bond yields pushed income-seeking investors away from real estate and utility companies. Healthcare stocks also slumped.

Banks continued to soar: Investors expect them to make bigger profits on loans as interest rates rise. Oil prices climbed for the second day after the countries of OPEC agreed to trim oil production next year.

Karyn Cavanaugh, senior market strategist for Voya Investment Strategies, said a focus on President-elect Donald Trump’s trade policies might be hurting tech stocks. Trump toured a Carrier factory in Indiana on Thursday after announcing the company will keep some operations at the facility instead of moving them to Mexico.

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“If you’re going to bring jobs back to America and make stuff here, tech is going to be pretty vulnerable,” she said. “If there’s going to be a trade war, tech is pretty vulnerable.”

The Dow rose 68.35 points, or 0.4%, to 19,191.93, its highest close on record. The Standard & Poor’s 500 index fell 7.73 points, or 0.4%, to 2,191.08. The Nasdaq composite dropped 72.57 points, or 1.4%, to 5,251.11.

Stock indexes set records after the presidential election last month, but lately they have wobbled as different industries were pulled in opposite directions. Banks and industrial and materials companies are rising while tech stocks have weakened.

Bond prices continued to tumble, sending benchmark yields higher. The yield on the 10-year Treasury note rose to 2.44% from 2.38%, its highest since July 2015. That sent bank stocks higher because higher bond yields are linked to higher interest rates, which enable banks to make more money from lending.

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Goldman Sachs jumped 3.3% to $226.63, its highest price since December 2007, and JPMorgan Chase went up 2% to $81.79.

Facebook sank 2.8% to $115.10 and chipmaker Analog Devices dropped 7% to $69.01. Microsoft fell 1.8% to $59.20.

After a big gain Wednesday, the dollar slipped to 114.03 yen from 114.22 yen. The euro rose to $1.0649 from $1.0599. In the last few weeks, the dollar has reached a 13-year high against other currencies. A strong dollar hurts profits and sales for companies that do a lot of business overseas, and the tech firms on the S&P 500 get almost 60% of their revenue outside the United States.

Oil prices rallied again and reached their highest level since mid-October. Benchmark U.S. crude rose $1.62, or 3.3%, to $51.06 a barrel in New York. Brent crude, the standard for pricing international oils, advanced $2.10, or 4.1%, to $53.94 a barrel in London. Chevron shares rose 1.6% to $113.29 and Phillips 66 stock climbed 2.3% to $84.98.

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The price of oil soared 9% Wednesday after the members of OPEC, which collectively produce more than one-third of the world’s oil, agreed to a small cut in production starting in January. The price of oil has mostly traded between $40 and $50 a barrel since early April. It dipped as low as $26 a barrel in February.

A big post-election rally has faded in the last few days, but Cavanaugh said she thinks major indexes will move higher. She noted that corporate earnings grew in the third quarter for the first time in more than a year, and U.S. manufacturing has been recovering.

“We’ve been so starved for anything that could even resemble growth,” she said. “If the U.S. is doing better, then that’s going to help the whole entire global economy do better.”

Auto sales climbed in November, emerging from a recent slump. U.S. auto sales broke records last year and there have been some signs recently that demand is waning, but a Toyota executive said Thursday that he thinks sales could set a new record in 2016.

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GM shares rose 3.9% to $12.43 and Ford stock climbed 5.5% to $36.43 after the companies reported stronger sales growth than analysts expected.

Parker-Hannifin, which makes motion and control products, said it will pay about $4 billion to buy Clarcor, a company that makes mobile, industrial and environmental filtration products. The deal values Clarcor at $83 per share and its stock jumped 17.2% to $82.58. Parker-Hannifin rose 3.3% to $143.47.

Wholesale gasoline rose 6 cents to $1.55 a gallon. Heating oil rose 7 cents to $1.65. Natural gas rose 15 cents to $3.51 per 1,000 cubic feet.

Gold fell $4.50 to $1,169.30 an ounce. Silver rose 2 cents to $16.51 an ounce. Copper ticked up 1 cent to $2.64 a pound.

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European stock indexes fell. Germany’s DAX lost 1% and Britain’s FTSE 100 fell 0.5%. The CAC 40 in France shed 0.4%. Japan’s Nikkei 225 jumped 1.1% and the Kospi of South Korea was little changed. The Hang Seng index in Hong Kong gained 0.4%.

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UPDATES:

1:50 p.m.: This article was updated with closing prices, context and analyst comments.

8:35 a.m.: This article was updated with market prices and context.

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This article was originally published at 6:55 a.m.


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