Bond yields and the dollar’s value rise on a listless day for stocks
The stock market hasn’t been this boring in years. The Standard & Poor’s 500 remained at a near-standstill Wednesday, the ninth day in a row that it has moved less than 0.4% up or down. That’s its longest streak of listlessness since the summer of 2013. Other indexes were mixed.
The S&P 500 rose 4 points, or 0.2%, to 2,271.89. The Dow Jones industrial average slipped 22.05 points, or 0.1%, to 19,804.72. The Nasdaq composite index advanced 16.93, or 0.3%, to 5,555.65. Slightly more stocks rose on the New York Stock Exchange than fell.
Stocks have been in wait-and-see mode in recent weeks after a torrid run since Donald Trump’s surprise victory in the November presidential election. The S&P 500 is up 6.2% since the election, driven higher by expectations for lower corporate taxes and less regulation. Trump will take the oath of office Friday, and investors are wondering how much of his campaign trail rhetoric will become government policy.
“It’s natural after such a remarkable run post-election to have a bit of a flat, quiet period as investors wait for some more tangibles,” said Katie Nixon, chief investment officer at Northern Trust Wealth Management. “We know directionally where Donald Trump wants to go, and with a Republican Congress he’s got a higher probability of success than otherwise, but we don’t have the details.”
One notable area of weakness in the stock market was retail. The 2016 holiday shopping season was weaker than many traditional retailers were expecting, and Target became the latest to cut its forecast for fourth-quarter sales and profit. Target said its performance was disappointing in November and December, and its stock fell 5.8% to $66.85 after that announcement.
Target had the second-largest drop in the S&P 500. Dollar Tree and other retailers weren’t far behind.
The biggest drop in the S&P 500 came from specialty biopharmaceutical company Mallinckrodt, which fell 5.8% to $46.53 after it agreed to pay $100 million to end a government investigation. Antitrust regulators and five states said Questcor, a company Mallinckrodt bought in 2014, illegally bought the rights to a drug that would have competed with its Acthar gel. The agencies said that deal gave Questcor a monopoly. Questcor raised the price of Acthar to $34,000 a vial, from its 2001 price of $40.
Fastenal jumped 5.8% to $51.06, posting the biggest gain in the S&P 500. The seller of nuts, bolts and other hardware reported stronger fourth-quarter earnings growth than analysts expected.
Adobe Systems rose 0.7% to $108.79 after the San Jose software maker said it would buy back as much as $2.5 billion in additional stock.
Treasury yields rose sharply. The yield on the 10-year Treasury note climbed to 2.42% from 2.33%. That more than made up for Tuesday’s drop, continuing the upward march that bond yields have been on since the election. Expectations of higher inflation, along with faster economic growth, have driven the trend.
Consumer prices last month were 2.1% higher than at the same time a year earlier, according to a Labor Department report released Wednesday. Economists say the inflation rate is still relatively modest, but it’s a clear acceleration from the very low levels of the last four years.
The “beige book,” a survey of conditions by the Federal Reserve released Wednesday afternoon, showed that the U.S. economy grew a bit faster at the end of last year and that pricing pressures “intensified somewhat” since its last report in November.
The Federal Reserve has raised interest rates twice in the last two years, up from their record low of nearly zero. The central bank has said that it plans for a gradual increase in rates. Fed Chair Janet Yellen said in a speech Wednesday that officials expect to raise rates “a few times a year” through 2019. But a big push higher in inflation could force the Fed’s hand.
The dollar rose against many currencies, a day after it sank sharply against the British pound and others. The dollar rose to 113.74 yen from 112.66 yen. The British pound fell to $1.2284 from $1.2396, and the euro fell to $1.0664 from $1.0709.
In Asian trading, Japan’s Nikkei 225 index rose 0.4% and South Korea’s Kospi index slipped 0.1%. In Europe, Germany’s DAX rose 0.5% and Britain’s FTSE 100 rose 0.4%, while France’s CAC 40 edged down 0.1%.
Benchmark U.S. crude oil fell $1.40 to $51.08 a barrel. Brent crude, the international standard, fell $1.55 to $53.92. Natural gas fell 11 cents to $3.302 per 1,000 cubic feet, heating oil fell 4 cents to $1.61 a gallon and wholesale gasoline fell 5 cents to $1.55 a gallon.
Gold slipped 80 cents to $1,212.10 an ounce, silver rose 13 cents to $17.27 an ounce and copper fell 9 cents to $2.62 a pound.
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UPDATES:
2:10 p.m.: This article was updated with closing prices, analyst comment and context.
8 a.m.: This article was updated with market prices and context.
This article was originally published at 6:55 a.m.
