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Stocks Stumble, Erasing Some of the Prior Day’s Gains

Stock Market Update

Technology and health care companies drove a broad slide in U.S. stocks, erasing some of the market’s solid gains from a day earlier and more in Wednesday’s Stock Market Update.

The sell-off, which followed a wobbly start for the market, put the Dow Jones Industrial Average on track to end the month with a loss.

The yield on the benchmark 10-year Treasury note continued to decline, dropping to 2.38 percent from 2.41 percent late Tuesday. That remained below the yield on the three-month Treasury bill, which can be a worrying sign for the market. When that kind of “inversion” in bond yields occurs, economists fear it may signal a recession within the coming year.

Chipmakers were among the big technology sector decliners. Advanced Micro Devices fell 3.9 percent and Micron Technology dropped 3 percent. Centene led the slide in health sector stocks, giving up 6.3 percent, after agreeing to buy WellCare Health Plans for more than $15 billion.

Banks fell as bond yields fell, which cuts into lenders’ ability to charge higher rates on loans. Citizens Financial Group was down 0.9 percent.

Homebuilders marched broadly higher, getting help from lower bond yields, which tend to pull mortgage rates lower.

U.S. stocks remain on track to finish the quarter with solid gains, even after Wednesday’s wave of selling and a steep sell-off last week as traders fretted over the slowing global economy and implications of the inversion in bond yields.

Investors are still waiting to see how the U.S. and China will resolve their costly trade dispute, with high-level talks between Washington and Beijing scheduled to resume Thursday. They’re also looking ahead to the next batch of corporate earnings reports, which start to roll in next week.

STOCK MARKET UPDATE

ANALYST’S TAKE: “People are trying to figure out what things like the inverted yield curve could mean,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “They’re also trying to figure out exactly how the Brexit drama will finally unfold, and then you also have issues like trade orbiting and all of that comes amid the backdrop of pretty mixed economic data.”

KEEPING SCORE: The Dow Jones Industrial Average lost 32 points, or 0.1 percent, to 25,625 at closing time. The S&P 500 index slid 0.5 percent and the Nasdaq composite fell 0.6 percent. The Russell 2000 index of smaller company stocks was down 0.4 percent.

The benchmark S&P 500 index is up more than 11 percent so far in 2019, an unusually strong start to the year.

Major European indexes closed mixed. Investors were keeping a close eye on developments in Britain, where lawmakers were debating various alternatives for the country’s split from the European Union.

HEALTHY COMBO: WellCare Health Plans jumped 9.9 percent after the company agreed to be acquired by rival Centene for more than $15 billion.

Both companies are big players in the Affordable Care Act market. The deal comes two days day after the Trump administration attacked the ACA in court, saying that former President Barack Obama’s health care law should be declared unconstitutional.

TAKING FLIGHT: Airlines bucked the broader decline in industrial sector stocks. Southwest Airlines rose 2.2 percent, Delta Air Lines added 1.8 percent and American Airlines Group picked up 2.8 percent.

HOME SWEET HOME: Homebuilders climbed as bond yields fell. Mortgage rates tend to move along with the yield on the 10-year Treasury note, and lower mortgage rates make it easier for would-be buyers to purchase a home.

LGI Homes jumped 5.1 percent and PulteGroup rose 4.1 percent.

ON SOUND FOOTING: Shoe Carnival jumped 21.1 percent after the retailer’s fourth-quarter earnings and revenue exceeded analysts’ forecasts.

ENERGY: Oil and gas futures closed lower. Benchmark U.S. crude fell 0.9 percent to settle at $59.41 a barrel. Brent crude, used to price international oils, dropped 0.2 percent to close at $67.83 a barrel.

Wholesale gasoline gave up 3.1 percent to $1.90 a gallon, heating oil slipped 0.5 percent to $1.98 a gallon and natural gas fell 1 percent to $2.71 per 1,000 cubic feet.

© The Associated Press. All rights reserved.

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