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Stocks finish mixed, and bond yields rise again

Specialist Gregg Maloney, left, and trader Jeffrey Vazquez work on the floor of the New York Stock Exchange.
(Richard Drew / Associated Press)

A late round of buying erased early losses on Wall Street, leaving major indexes mixed at the close of trading Wednesday. Stocks had gotten off to a weak start as investors worried that growing costs for raw materials along with rising interest rates would hold back profit growth for U.S. companies.

The Dow Jones industrial average fell as much as 201 points in the morning as technology and healthcare companies declined and defense contractors stumbled after Northrop Grumman and General Dynamics released first-quarter reports. U.S. bond yields rose again, setting four-year highs. Oil prices, already at three-year highs, continued to climb.

Later in the day, energy companies got a boost after Exxon Mobil said it was raising its quarterly dividend. Retailers and industrial companies also rose. Smaller companies ended down, and most stocks on the New York Stock Exchange fell.

Stocks had tumbled Tuesday after companies including Caterpillar, 3M and Sherwin-Williams said they were seeing higher costs and Caterpillar said it doesn’t expect to top its first-quarter earnings this year. On Wednesday, Goodyear Tire & Rubber fell 5.1% to $25.51 after it said higher raw materials costs and weaker demand hurt its business in the first quarter.

Invesco chief global market strategist Kristina Hooper said investors are starting to worry that the market’s best days are behind it. She noted that wages are rising, as unemployment has been at multi-decade lows for the last few years. That means costs for companies are up. Oil prices have also jumped, plus investors are worried that new tariffs will drive up costs and affect company earnings in the months to come.

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“I wouldn’t be surprised if earnings peaked by the end of this year, but certainly they haven’t peaked yet,” she said.

The Standard & Poor’s 500 index rose 4.84 points, or 0.2%, to 2,639.40 on Wednesday. Thanks to a big gain from Boeing, the Dow snapped a five-day losing streak and rose 59.70 points, or 0.2%, to 24,083.83. The losing streak was the index’s longest in more than a year. The Nasdaq composite slipped 3.61 points, or 0.1%, to 7,003.74. The Russell 2000 index of smaller-company stocks fell 2.81 points, or 0.2%, to 1,550.47.

Company profits fuel the stock market, and when they are rising, stocks tend to do well. Investors expected strong profit growth this year, thanks to the growing global economy and the corporate tax cut President Trump signed at the end of 2017. That optimism helped send stocks to record highs in January. Now investors are worrying about whether that growth will happen.

Aerospace company Boeing topped Wall Street’s estimates in the first quarter and raised its forecasts for the year. Its stock climbed 4.2% to $342.86. Railroad operator Norfolk Southern jumped 8.1% to $145.96 after it, too, surpassed analyst projections.

Edwards Lifesciences fell 3.8% to $129.52 after the Irvine medical device maker reported weak sales, and analysts were concerned about sales of a key heart device.

Investors also monitored rising interest rates, which tend to slow down economic growth by making it more expensive for people and companies to borrow money. Bond prices fell again Wednesday, sending yields higher. The yield on the 10-year Treasury note continued to set four-year highs as it rose to 3.03% from 3%.

Low interest rates have played an important role in the economic recovery of the last decade, and the yield on the 10-year note is a benchmark for many kinds of interest rates, including mortgages. It has been climbing because investors expect economic growth and inflation to rise. While investors expect the Federal Reserve to raise interest rates two more times this year, growing numbers of them now expect it to raise rates a third time after that.

Media conglomerate Comcast made a new offer to buy British broadcaster Sky, this time for $30 billion. Sky had accepted a $16.5-billion offer from 21st Century Fox. British regulators are investigating whether Fox’s bid for Sky would give Rupert Murdoch and his family too much control over the country’s news media. Comcast also had a stronger first quarter than analysts expected, although it continued to lose cable subscribers. Its stock rose 2.7% to $34.26. Sky gained 3.9% in London trading. Fox rose 1.6% to $36.58. Disney, which plans to buy most of Fox’s overseas and entertainment assets, climbed 1.7% to $101.15.

The dollar rose to 109.34 yen from 108.67 yen. The euro fell to $1.2175 from $1.2237.

Benchmark U.S. crude oil rose 0.5% to $68.05 a barrel. It’s up 33% over the last 12 months and is trading at its highest price in more than three years. Brent crude, used to price international oils, rose 0.2% to $74 a barrel. Wholesale gasoline fell 0.2% to $2.09 a gallon. Heating oil rose 0.4% to $2.14 a gallon. Natural gas rose 0.2% to $2.79 per 1,000 cubic feet.

Gold fell 0.7% to $1,323.70 an ounce. Silver sank 1.1% to $16.52 an ounce.

In overseas markets, Germany’s DAX fell 1%. Britain’s FTSE 100 and France’s CAC 40 both lost 0.6%. Japan’s benchmark Nikkei 225 shed 0.3%. Hong Kong’s Hang Seng lost 1%, and the South Korean Kospi lost 0.6%.


UPDATES:

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

1:15 p.m.: This article was updated with the close of markets.

This article was originally published at 10:40 a.m.


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