Major Us Stock Indexes Struggle Lower as Tech Falls Again
After a wobbly day of trading, U.S. stocks closed broadly lower for the sixth time in seven days as technology companies continued to slide. The market’s losses Monday were limited relative to the steep drops last week. Gains by industrial and high-dividend companies helped limit the retreat.
KEEPING SCORE: The S&P 500 index fell 16 points, or 0.6 percent, to 2,750. The Dow Jones Industrial Average lost 89 points, or 0.4 percent, to 25,250. The Nasdaq composite gave up 66 points, or 0.9 percent, to 7,430. The Russell 2000 index of smaller-company stocks climbed 13 points, or 0.9 percent, to 1,560.
Stocks have repeatedly switched between small gains and losses. After a weak start, the Dow fell 86 points, then rose 99 and fell another 89. But stocks traded in even wider ranges last week. The S&P 500 rallied Friday but lost 4.1 percent for the week, its third weekly loss in a row.
TECH FALLS AGAIN: The technology companies that have led the market higher in recent years, including some of the world’s most valuable companies, continued to decline. Apple gave up 1.2 percent to $219.37 and chipmaker Nvidia skidded 3.2 percent to $238.57
The S&P 500 index of technology companies has dropped 7.5 percent since setting a record high on Oct. 3, less than two weeks ago.
THE QUOTE: Jason Pride, chief investment officer for private clients at Glenmede, said that investors expect many years of powerful profit growth from technology-oriented companies like Apple, Amazon and Netflix. Over the last two weeks, Wall Street has started considering the possibility that interest rates will rise more quickly, taking a bigger chunk out of those critical future profits.
“The more the company’s valuation is dependent on some profit way ahead in time as opposed to the profits coming today, the more rate hikes should impact the valuation of that company,” he said. Pride said the recent downturn is a healthy development for stocks.
“A 5 to 10 percent pullback of that magnitude is very normal and very reasonable for this market to go through,” he said.
D-FENSE: Defense contractors L3 Technologies and Harris Corp. were the biggest gainers on the S&P 500 after they said they will combine in an-all stock deal. The combined L3 Harris Technologies will have annual sales of around $16 billion this year, which would make it the sixth-largest U.S. defense contractor and one of the top 10 globally.
L3 gained 13 percent to $221.18 and Harris rose 11.9 percent to $173.25.
ENERGY: U.S. crude rose 0.6 percent to $71.78 a barrel in New York. Brent crude, the standard for international oil prices, added 0.4 percent to $80.78 a barrel in London. Natural gas prices continued to surge as the weather in the U.S. grew colder. They rose 2.6 percent to $3.24 per 1,000 cubic feet and have climbed almost 8 percent in October to reach their highest price since January.
Wholesale gasoline edged up 0.1 percent to $1.94 a gallon and heating oil added 0.2 percent to $2.33 a gallon.
BONDS: Bond prices edged lower. The yield on the 10-year Treasury note rose to 3.16 percent from 3.14 percent late Friday.
Rising bond yields often lead to losses for high-dividend companies because many investors think of them as alternatives to bonds. That pattern hasn’t held up in the last few days as investors have been looking for relatively safe picks on the stock market. On Monday, power company Southern Co. added 2.2 percent to $44.54 and wireless infrastructure company American Tower rose 1.4 percent to $144.07.
METALS: In another sign investors were nervous about stocks, gold rose 0.7 percent to $1,230.30 an ounce and silver picked up 0.6 percent to $14.73 an ounce. Copper lost 0.4 percent to $2.79 a pound.
CURRENCIES: The dollar fell to 111.87 yen from 112.01 yen. The euro rose to $1.1583 from $1.1563.
OVERSEAS: Germany’s DAX jumped 0.8 percent and the FTSE 100 in Britain rose 0.5 percent. France’s CAC 40 fell less than 0.1 percent.
Japan’s benchmark Nikkei 225 dipped 1.9 percent and the South Korean Kospi edged down 0.8 percent. Hong Kong’s Hang Seng fell 1.5 percent.
Global stock indexes have been struggling this year as investors move money to the U.S. and out of Europe and Asia in response to faster economic growth in the U.S. and rising trade tensions. The losses the last few weeks for global markets have made it even worse.
The Hang Seng index in Hong Kong has fallen 22 percent since early January, meeting Wall Street’s definition of a “bear market,” or a decline of 20 percent from a recent peak. A number of other indexes have fallen at least 10 percent, known as a “correction.” Those include the DAX and Kospi, which both peaked in late January, as well as the FTSE 100, the Ibex in Spain and the FTSE MIB in Italy, which peaked in May.
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