U.S. Stocks Slide as Bank, Health-Care Shares Fall
April 18 2017 - 7:51PM
Dow Jones News
By Akane Otani and Mike Bird
U.S. stock indexes fell Tuesday, weighed down by a slide in
shares of banks and health-care companies.
Investors have backed away from stocks in recent weeks while
picking up government bonds as tepid economic data, as well as
political tensions around the world, stoked demand for safer
assets.
A series of disappointing earnings reports contributed to the
retreat in stocks Tuesday, investors and analysts said. With
expectations waning for passage of pro-growth policies from the
Trump administration, many say continued signs of corporate health
will be key to stocks rising.
"The market's taken a bit of a pause lately, and part of that
has to do with markets in the U.S. being at the high end of
valuations," said Mark Watkins, regional investment strategist at
the Private Client Group at U.S. Bank in Park City, Utah. "If we
see earnings that miss or are below expectations, that could be a
warning sign."
The Dow Jones Industrial Average lost 113.64 points, or 0.6%, to
20523.28. The S&P 500 fell 6.82 points, or 0.3%, to 2342.19,
and the Nasdaq Composite lost 7.32 points, or 0.1%, to 5849.47. All
three indexes have fallen in four of the past five trading
days.
Bank stocks slid after Goldman Sachs Group's first-quarter
trading results fell short of those posted by its rivals. Shares of
Goldman Sachs fell $10.67, or 4.7%, to $215.59, wiping away about
73 points from the Dow industrials. The KBW Nasdaq Bank Index of
leading U.S. commercial lenders dropped 1%.
Bank of America shares initially traded higher, but later slid
10 cents, or 0.4%, to 22.71, after the company reported a
higher-than-expected first-quarter profit and adjusted revenue that
beat analysts' expectations.
Declines in health-care stocks put further pressure on major
indexes, with Johnson & Johnson shedding 3.90, or 3.1%, to
121.82 after the company posted underwhelming sales in the latest
quarter. The drop shaved roughly 27 points off the Dow industrials.
Health-care stocks in the S&P 500 fell 1%.
"Now is when earnings become critical for the direction of the
markets moving forward," said Michael Binger, senior portfolio
manager at Gradient Investments. With stocks still trading near
their highs, Mr. Binger said he would be watching for not just
solid earnings results, but also a pickup in corporate
guidance.
Government bonds gained, with the yield on the 10-year U.S.
Treasury note falling to 2.177%, the lowest close since Nov. 10,
from 2.248% Monday. Yields fall as bond prices rise.
Elsewhere, European stocks dropped after British Prime Minister
Theresa May said she would call an early general election, a move
some analysts interpreted as an effort to get more leeway in coming
exit negotiations with the European Union.
The Stoxx Europe 600 index fell 1.1%. The U.K.'s export-heavy
FTSE 100 lost 2.5%, weighed down by a rally in the pound. The U.K.
currency jumped 2.2% against the dollar to $1.2841.
In Asia on Tuesday, the Shanghai Composite Index fell 0.8%. Hong
Kong's Hang Seng Index fell 1.4%, its largest one-day decline since
December.
Write to Akane Otani at akane.otani@wsj.com and Mike Bird at
Mike.Bird@wsj.com
(END) Dow Jones Newswires
April 18, 2017 19:36 ET (23:36 GMT)
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