Stocks Settle Down on Thursday 12/13 15:59
U.S. stocks wobbled Thursday as the markets turned fairly quiet after a very
turbulent start to the week.
NEW YORK (AP) -- U.S. stocks wobbled Thursday as the markets turned fairly
quiet after a very turbulent start to the week. Small companies dropped and
high-dividend stocks, which investors favor when they want to reduce risk, rose.
Major stock indexes spent the day switching between small gains and losses
after several days of much bigger moves. Clothing companies and other retailers
fell, weighed down by weak earnings reports, and a disappointing forecast from
Delta hurt airlines.
Chemical and basic materials makers also sank. Investors shifted some money
into high-dividend stocks including utilities, household goods makers and real
estate investment trusts.
Trading has been jagged over the last few months as investors worried about
growing trade tensions and rising interest rates. Mona Mahajan, U.S. investment
strategist for Allianz Global Investors, said traders aren't sure what strategy
to use right now: many recent market favorites, including Facebook, Amazon,
Netflix and Google, have taken a beating. Yet the global economy is still
growing, making high-dividend, low-growth stocks like utilities feel like a
strange choice, she said.
"Over the last few weeks the mentality of 'buy the dip' has been replaced by
something more like 'sell the rally,'" she said. "There is a little bit of a
void right now, and I think that is creating some of this shift out of the most
crowded and most profitable trades, and this overall shift in market mentality."
The European Central Bank said it will end its bond-buying stimulus program
at the end of the year, but trimmed its forecasts for growth across Europe. The
bank isn't ending its stimulus program entirely, as it will continue to invest
money from maturing bonds and will take other steps to encourage banks to lend
The S&P 500 index lost 0.53 points to 2,650.54. The Dow Jones Industrial
Average added 70.11 points, or 0.3 percent, to 24,597.38 as McDonald's and
Procter & Gamble rose. The Nasdaq composite fell 27.98 points, or 0.4 percent,
The Russell 2000 index of smaller companies fell 22.62 points, or 1.6
percent, to 1,432.70. The Russell has fallen 17.7 percent since setting a
record high in late August and is trading at its lowest level since September
Among other issues, that reflects investors' fears about slowing economic
growth in the U.S. and rising interest rates. Smaller companies are more
vulnerable in times of slower growth, and they tend to carry higher levels of
debt than larger companies do. Higher rates make those debts more costly.
Shaky reports from retailers may have added to those worries Thursday as
apparel company Tailored Brands and Oxford Industries, the parent of Tommy
Bahama and Lilly Pulitzer, both cut their forecasts for the year. Tailored
Brands nosedived 29.8 percent to $14.13 and Oxford slipped 10.1 percent to
$67.24. Smaller industrial and financial companies also dropped and larger
retailers struggled as well.
The European Central Bank has spent about $3 trillion on bonds since early
2015 in an effort to encourage growth in Europe's economy, and the end of its
bond-buying program comes as credit conditions around the world are gradually
The Federal Reserve has been steadily raising interest rates for three years
and is letting its balance sheet shrink, and the Bank of England is also
backing away from the stimulus efforts it employed following the global
financial crisis of 2007-2009 and the Great Recession.
Those programs helped push global stock markets higher in recent years and
their end might contribute to more volatility, but investors appeared to take
the news in stride. Germany's DAX and the British FTSE 100 were little changed
while the CAC 40 in France fell 0.3 percent.
Oil prices climbed following a Bloomberg News report that Saudi Arabia plans
to cut exports to the U.S. The Senate also passed a resolution recommending the
U.S. end its assistance to the kingdom for the war in Yemen, and also blamed
Saudi Crown Prince Mohammed bin Salman for the killing of journalist Jamal
Khashoggi. The resolution may not become law, but could increase tensions
between Saudi Arabia and the U.S.
General Electric climbed 7.3 percent to $7.20 after JPMorgan Chase analyst
C. Stephen Tusa upgraded the stock to "Neutral" from "Underweight." GE has
fallen almost 60 percent this year after slashing its dividend, replacing its
CEO, and taking big charges tied its power business and its insurance business.
Analysts are concerned that several of its divisions are years away from being
The Japanese Nikkei 225 index gained 1 percent and Hong Kong's Hang Seng
jumped 1.3 percent while the Kospi in South Korea added 0.6 percent.
Benchmark U.S. crude oil jumped 2.8 percent to $52.58 per barrel in New
York. Brent crude, the international standard, rose 2.2 percent to $61.45 per
barrel in London.
Wholesale gasoline climbed 4.1 percent to $1.48 a gallon and heating oil
rose 1.4 percent to $1.88 a gallon. Natural gas slipped 0.3 percent to $2.14
per 1,000 cubic feet.
Bond prices edged lower. The yield on the 10-year Treasury note rose to 2.91
percent at 2.90 percent.
Gold dipped 0.2 percent to $1,247.40 an ounce. Silver was little changed at
$14.89 an ounce and copper stayed at $2.77 a pound.
The dollar rose to 113.60 yen from 113.22 yen. The euro finished unchanged
at $1.1367. The British pound rose to $1.2660 from $1.2634.