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Stocks fall, breaking the Dow’s 12-day win streak

The Wall Street entrance of the New York Stock Exchange.
(Richard Drew / Associated Press)

A slide led by Target and other big retailers pulled U.S. stock indexes lower Tuesday, snapping a 12-day winning streak for the Dow Jones industrial average.

Industrial stocks and phone companies were also among the big decliners. Energy companies fell as crude oil prices edged lower. Utilities stocks eked out a gain.

Investors were focused on an evening speech by President Trump to Congress, hoping to glean more details on the timing of tax cuts and other policies.

“The next direction of this market, in our view, is going to be very much driven by the ability of the administration to start putting into action some of the things that the market has gotten excited about, mainly tax reform more than anything else,” said Rob Eschweiler, global investment specialist at J.P. Morgan Private Bank.

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The Dow fell 25.20 points, or 0.1%, to 20,812.24. The Standard & Poor’s 500 index slid 6.11 points, or 0.3%, to 2,363.64. The Nasdaq composite index sank 36.46 points, or 0.6%, to 5,825.44.

Small-company stocks fell more than the rest of the market. The Russell 2000 index slumped 21.29 points, or 1.5%, to 1,386.68.

Bond prices fell. The 10-year Treasury yield rose to 2.39% from Monday’s 2.37%.

Trump was scheduled to deliver his first speech to a joint session of Congress on Tuesday evening. On Monday the president told a group of governors that his budget would propose increasing defense spending by $54 billion while cutting domestic programs and foreign aid by the same amount. He also said, “We’re going to start spending on infrastructure big.”

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Since the election in November, expectations of tax reform, deregulation and ramped-up spending on defense and infrastructure projects have pushed the stock market higher. Investors are looking for more clarity on business-friendly policies, as well as on trade, immigration and other Trump administration policy initiatives that have made some investors nervous.

The market “has priced in all the positive aspects of some of his campaign promises, but what it hasn’t done is price in the negatives that could result from healthcare, trade policies, border taxes, things like that, which are a little bit less clear,” said Lindsey Bell, investment strategist at CFRA Research.

Traders weren’t entirely focused on Washington on Tuesday. They continued to size up the latest company earnings and outlooks.

Target plunged 12.2% to $58.77 after the retail chain’s latest quarterly profit fell short of Wall Street’s forecasts. The company also issued a weak outlook.

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Perrigo slumped 11.7% to $74.77 after investors reacted to several disclosures by the Irish drugmaker, including disappointing guidance for 2017 and the company’s decision to sell its royalty rights to a multiple sclerosis drug for as much as $2.85 billion. Perrigo said that the sale will hurt its earnings, but that it plans to use the proceeds to pay down some of its debts.

Improved earnings and outlooks gave weight loss company Nutrisystem a big boost. The stock vaulted 18.6% to $46.50.

Shares in Priceline climbed 5.6% to $1,724.13 after the online booking company posted strong quarterly earnings.

Online brokers fell sharply after Fidelity announced a cut in trading commissions.

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ETrade Financial sank 7.2% to $34.51. Charles Schwab fell $1.32, or 3.2%, to $40.41. TD Ameritrade slumped 10.5% to $39.10. Fidelity is privately held.

Signet Jewelers was the biggest decliner in the S&P 500, sinking 12.7% to $63.59 after a report of widespread sexual harassment and discrimination at a subsidiary. The Washington Post first reported the allegations Monday, based on newly released class-action arbitration filings.

Kite Pharma soared 24.5% to $70.77 after the Santa Monica biotech company said an experimental gene therapy that turns a patient’s own blood cells into cancer killers worked in a major study.

Read more: Major study of Kite Pharma cancer therapy shows good results »

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Investors also weighed new data on the economy. The Commerce Department said the U.S. economy grew at a 1.9% rate in the last three months of 2016, unchanged from an initial estimate. The increase in the gross domestic product — the broadest measure of economic health — represented a significant slowdown from the 3.5% growth rate recorded in the third quarter.

The major indexes in Europe notched gains. Germany’s DAX rose 0.1%. The CAC 40 in France climbed 0.3%. The FTSE 100 index of leading British shares added 0.1%. Earlier in Asia, Japan’s benchmark Nikkei 225 index finished up less than 0.1%. South Korea’s Kospi rose 0.3%. Hong Kong’s Hang Seng lost 0.8%. And Australia’s S&P/ASX 200 shed 0.2%.

Benchmark U.S. crude fell 4 cents, or 0.1%, to $54.01 a barrel in New York. Brent crude, which is used to price international oils, fell 34 cents, or 0.6%, to $55.59 a barrel in London.

Wholesale gasoline fell 2 cents to $1.51 a gallon. Heating oil fell 2 cents to $1.62 a gallon. Natural gas futures rose 8 cents, or 3%, to $2.77 per 1,000 cubic feet.

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Among metals, the price of gold fell $4.90 to $1,253.90 an ounce. Silver rose 7 cents to $18.42 an ounce. Copper rose 2 cents to $2.70 a pound.

In currency trading, the dollar fell to 112.17 yen from 112.80 yen. The euro rose to $1.0597 from $1.0589. 

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UPDATES:

3:20 p.m.: This article was updated with closing prices, context and analyst comments. 

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


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