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Stocks edge down as banks and tech companies fall

Pedestrians pass the New York Stock Exchange, Tuesday, Oct. 11, 2016, in New York. A batch of disapp
The New York Stock Exchange.
(Frank Franklin II / Associated Press)

U.S. stock indexes edged down for the second day in a row Wednesday as a sharp drop for banks and a rare loss for technology companies canceled out gains for drugmakers and consumer-focused companies.

Banks fell hard as executives from JPMorgan Chase and Bank of America said their trading businesses are having a rough second quarter. An eight-day winning streak for technology companies ended. Energy companies fell with oil prices. Investors picked consumer goods and pharmaceutical companies and high-dividend utilities. The New York Stock Exchange was evenly split between gainers and losers.

“The stock market has been strong and all the while bond yields have dropped during the year,” signaling caution about the economy, said Brent Schutte, chief investment strategist for Northwestern Mutual Management. “In the next couple of months we’re going to solve which is right: the bond market or the stock market.”

The Standard & Poor’s 500 index slipped 1.11 points, or less than 0.1%, to 2,411.80. The Dow Jones industrial average fell 20.82 points, or 0.1%, to 21,008.65. The Nasdaq composite fell 4.67 points, or 0.1%, to 6,198.52. The Russell 2000 index of small-company stocks slipped 0.99 of a point, or 0.1%, to 1,370.21.

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Banks skidded a day earlier as bond yields dropped, forcing down interest rates on loans. Yields were little changed Wednesday, but financial firms fell again as investors worried that banks’ revenue from trading stocks, bonds and currencies will weaken this quarter.

At a financial industry conference in New York, Marianne Lake, JPMorgan Chase’s chief financial officer, said JPMorgan’s trading revenue is down about 15% this quarter because of a drop in fixed-income trading. She said that was because of low interest rates and remarkably low market volatility.

“There is not a lot to trade around,” she said. “People have cash but no conviction.”

At a different industry event Wednesday, Bank of America Chief Executive Brian Moynihan said second-quarter trading revenue will fall 10% compared with the year-earlier quarter.

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The banking industry had an outstanding first quarter, and trading was a key reason. On Wednesday, JPMorgan Chase shares fell 2.1% to $82.15. Bank of America fell 1.9% to $22.41. Capital One fell 1.7% to $76.92. Goldman Sachs, whose vaunted trading business hit a speed bump in the first quarter, slid 3.3% to $211.26.

Bond prices were little changed. The yield on the 10-year Treasury note remained at 2.21%.

Technology companies turned lower. The tech sector has reached its highest levels since the dot-com boom, and companies such as Apple, Google parent Alphabet and Facebook have done far better than the rest of the market in 2017. Apple and Facebook are up 32% this year, and Alphabet is up 25%. All three slid Wednesday.

Pfizer rose 1.6% to $32.65, and Irish drugmaker Perrigo jumped 7.3% to $72.85 after its first-quarter report was better than expected. Healthcare products maker Johnson & Johnson advanced 0.9% to $128.25.

Benchmark U.S. crude slid $1.34, or 2.7%, to $48.32 a barrel in New York. Brent crude, the standard for international oil prices, dropped $1.53, or 3%, to $50.31 a barrel in London.

Energy stocks continued to decline. Exxon Mobil shares fell 0.7% to $80.50. Hess sank 1.7%, to $45.89.

Michael Kors Holdings tumbled 8.5% to $33.18, a five-year low, after it said it would close up to 125 stores in response to continued weak sales. The luxury retailer said sales at older stores dropped in its latest quarter and investors were disappointed with its projections for the current quarter.

Read more: Michael Kors to close up to 125 stores in the next two years as it focuses on Asia »

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Solar power companies sank as investors wondered if President Trump will seek to remove the U.S. from the Paris climate change accords. Officials from the European Union said the EU and China would maintain their commitments to the pact.

Shares of First Solar, the largest U.S. solar company, declined 2.5% to $38.51. SunPower fell 3.4% to $7.87. Solar wafer maker Canadian Solar slid 5.4% to $12.81. However, Tesla, which acquired SolarCity last year, rose 1.8% to $341.01.

The dollar slipped to 110.57 yen from 110.78 yen. The euro rose to $1.1246 from $1.1188.

Wholesale gasoline fell 3 cents to $1.61 a gallon. Heating oil fell 3 cents to $1.52 a gallon. Natural gas fell 7 cents to $3.07 per 1,000 cubic feet.

Gold rose $9.70 to $1,265.40 an ounce. Silver fell 2 cents to $17.41 an ounce. Copper rose 2 cents to $2.58 a pound.

European stocks gave up an early gain. The DAX in Germany remained up 0.1%, but France’s CAC 40 lost 0.4% and the British FTSE 100 fell 0.1%. Japan’s Nikkei 225 index slipped 0.1% and South Korea’s Kospi gained 0.2%. The Hang Seng in Hong Kong inched down 0.1%.


UPDATES:

2:20 p.m.: This article was updated with closing prices, context and analyst comment.

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


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