Advertisement

Bank stocks fall, pulling U.S. indexes further from record highs

Bank stocks fall, pulling U.S. indexes further from record highs
A Wall Street sign near the New York Stock Exchange. (Jin Lee / Associated Press)

U.S. stocks finished lower Monday for the second time in the last three trading days. Banks gave back some of their recent gains after a jump in interest rates last week sent them sharply higher.

Mining and chemical companies declined after China cut its economic growth forecast, and airlines slumped after Delta said its business isn't improving as fast as it hoped. There were few winners to be found on Wall Street: More than two-thirds of the stocks on the New York Stock Exchange fell. That included consistent losses for banks, investment firms and insurance companies.

Advertisement

The Standard & Poor's 500 index fell 7.81 points, or 0.3%, to 2,375.31. The Dow Jones industrial average lost 51.37 points, or 0.2%, to 20,954.34. The Nasdaq composite lost 21.58 points, or 0.4%, to 5,849.17. The Russell 2000 index of smaller-company stocks sank 9.88 points, or 0.7%, to 1,384.25.

All four indexes reached all-time highs last week, and the S&P 500 and Nasdaq have risen for six weeks in a row. That's on top of a big surge in November and December. Those rapid gains the last few months have prompted some analysts to turn cautious.

"We think there's a reasonable chance at the end of the year we'll be a little bit lower than we are right now," said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute.

Over the weekend, Premier Li Keqiang, China's top economic official, trimmed the country's growth target to 6.5%. The Chinese economy is the second-largest in the world, and the prospect of slower growth there hurt mining, packaging and chemical companies and sent the price of copper lower.

But investors weren't nearly as alarmed about the latest signs of slowing growth in China as they were in the past. Stocks plunged in early 2016 as investors worried the Chinese economy might weaken in a hurry and drag the global economy down with it. Wren said Wall Street now thinks growth in China will slow gradually.

"The market's pretty comfortable with this controlled slowdown," he said. "A lot of that sell-off was due to the fear that Chinese growth was basically going to collapse," he said.

Delta Air Lines fell 2.6% to $48.85 after it gave a disappointing revenue projection for the second quarter. United and American Airlines each fell 3%.

Poultry companies slumped after a bird flu outbreak was discovered at a Tennessee farm. The affected farm is a supplier to Tyson Foods, and while Tyson said it doesn't expect its business to suffer, the news brought back bad memories for investors: In 2015, U.S. poultry producers lost 48 million birds to a different strain of the virus.

Tyson shares fell 2.5% to $61.99. Sanderson Farms fell 2% to $92.53, and Pilgrim's Pride declined 1.2% to $20.70.

French automaker PSA Group agreed to buy General Motors' European business, which has lost $20 billion since 1999 and hasn't made an annual profit over that span. Investors were glad to see it go: GM's stock jumped almost 5% when the talks were disclosed last month. But on Monday, the shares fell 32 cents to $37.91. PSA makes Peugeot and Citroen cars, and the addition of the Opel and Vauxhall brands will make it the second-largest automaker in Europe. Its stock rose 2.7%.

Nant Health dived 23.3% to $5.50 after an article in the publication Stat said the company's founder — Dr. Patrick Soon-Shiong, who is a major shareholder in the Los Angeles Times' parent company, Tronc — gave a big charitable donation in a way that steered most of the money back to Nant and enabled Nant to report inflated numbers to investors.

Snap sank 12.3% to $23.77, for the first time falling below the $24 price at which it made its stock market debut Thursday. The maker of the Snapchat app is still well above its $17 IPO price.

GoPro slid 7.9% to $8.14 after Goldman Sachs downgraded the action video camera company stock's rating to "sell."

Bond prices continued to slip. The yield on the 10-year Treasury note rose to 2.49% from 2.48%. Bond yields jumped last week as investors grew more certain the Federal Reserve would raise interest rates this month.

Advertisement

Companies that pay big dividends, such as real estate investment trusts, fell again. Those stocks are often compared with bonds because of their high yields, and higher bond yields make them less appealing to investors.

Benchmark U.S. crude fell 13 cents to $53.20 a barrel. Brent crude, used to price international oils, rose 11 cents to $56.01 a barrel. Natural gas companies rose as futures jumped 2.6% to $2.90 per 1,000 cubic feet.

In other energy trading, wholesale gasoline rose 2 cents to $1.67 a gallon and heating oil rose 1 cent to $1.60 a gallon.

Gold fell $1 to $1,225.50 an ounce. Silver rose 3 cents to $17.77 an ounce. Copper fell 4 cents to $2.65 a pound.

The dollar fell to 113.92 yen from 114.05 yen. The euro fell to $1.0588 from $1.0605.

In Germany the DAX fell 0.6%. France's CAC 40 slipped 0.5% and the FTSE 100 in Britain shed 0.3%. Japan's Nikkei 225 stock index fell 0.5% and the South Korean Kospi gained 0.1%. Hong Kong's Hang Seng index added 0.2%.

ALSO

UPDATES:

5:05 p.m.: This article was updated with information about Nant Health.

4:05 p.m.: This article was updated with closing prices, context and analyst comments.

This article was originally published at 7:50 a.m.

Advertisement
Advertisement