Stocks Slip Amid Declines in Financial Sector
January 17 2017 - 5:02PM
Dow Jones News
By Akane Otani and Riva Gold
U.S. stocks, the dollar and government bond yields fell Tuesday,
as some investors grew nervous that reality would fall short of
expectations once President-elect Donald Trump takes office later
this week.
Investors betting on higher growth and inflation under Mr. Trump
have generally sent the dollar and shares of financial companies
higher and sold long-dated government debt and gold since the
November election. But some of the steepest moves have stalled this
year.
The dollar, which had surged to a 14-year high earlier this
month, posted its largest daily decline since early June, and the
yield on the 10-year U.S. Treasury note sank to its lowest level
since Nov. 29. Financial companies, among the biggest winners in
the stock market since Election Day, suffered their biggest daily
drop since the Brexit selloff.
"We had this period of time where we rallied on potential
policies, but now the market is looking for what actually comes
in," said Brent Schutte, chief investment strategist at
Northwestern Mutual Wealth Management Company.
The WSJ Dollar Index, which tracks the currency against a basket
of 16 others, tumbled 1.3% after Mr. Trump described the currency
as "too strong" in an earlier interview with The Wall Street
Journal. Mr. Trump also criticized a key part of House Republicans'
corporate-tax plan.
Government bonds climbed, with the yield on the 10-year U.S.
Treasury note falling to 2.327% from 2.380% on Friday, and down
from a recent peak of 2.6% in mid-December. Yields fall as bond
prices rise.
The blue-chip index fell for a third consecutive session,
dropping 58.96 points, or 0.3%, to 19826.77. The S&P 500
declined 6.75 points, or 0.3%, to 2267.89 and the Nasdaq Composite
lost 35.39 points, or 0.6%, to 5538.73.
The S&P 500 financials sector slid 2.3% -- its biggest
decline since June 27. Higher long-term yields tend to improve
profits at lenders, a prospect that helped lift financial shares in
the S&P 500 by 18% from Election Day through Friday's
close.
Morgan Stanley, which posted its best fourth-quarter results
since the financial crisis on Tuesday, fell $1.66, or 3.8%, to
$42.15.
Goldman Sachs Group declined 8.56, or 3.5%, to 235.74 and J.P.
Morgan Chase lost 3.15, or 3.6%, to 83.55 -- together shaving about
80 points off the Dow industrials.
Shares of dividend-paying stocks, which tend to benefit when
investors are seeking safety, rose in the S&P 500, with the
utilities sector up 1.2% and the real-estate sector adding
0.8%.
Haven assets gained. Gold for January delivery rose 1.4% to
$1,212.00 an ounce, its highest settlement since Nov. 17.
In Europe, stocks pared declines and the British pound charged
back from a 31-year low after Prime Minister Theresa May gave more
details about her plans to take the U.K. out of the European
Union.
While Mrs. May said in her speech that the U.K. intends to leave
the EU's single market, "the most negative aspects of her speech
were already out there, and everything else was pretty levelheaded
in tone," said Stephen Gallo, strategist at BMO Capital
Markets.
The Stoxx Europe 600 fell 0.2% and the British pound rose 3%
against the dollar to $1.2414.
A stronger yen weighed on stocks in Japan, sending the Nikkei
Stock Average down 1.5% in its biggest drop this year. The Shanghai
Composite rose 0.2%, ending a five-day losing streak, while the
Hang Seng Index added 0.5%.
Write to Akane Otani at akane.otani@wsj.com and Riva Gold at
riva.gold@wsj.com
(END) Dow Jones Newswires
January 17, 2017 17:47 ET (22:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.