Stock Rally Stalls Amid Mixed Earnings, BOE Decision
August 03 2017 - 10:39AM
Dow Jones News
By Justin Yang and Riva Gold
-- Dow industrials stall near record high
-- Pound drops after Bank of England leaves rates unchanged
-- European earnings mixed
The stock rally that pushed the Dow Jones Industrial Average
above 22000 for the first time stalled Thursday.
The blue-chip index slipped 23 points, or 0.1%, to 21993 in
recent trading. The S&P 500 and Nasdaq Composite both declined
0.2%.
Some of the biggest insurance companies dragged the broader
financial sector lower after reporting earnings results. Prudential
Financial shares fell 2.8% in recent trading as its operating
income missed analyst expectations. MetLife shares were recently
down 1.7%.
In other corporate news, shares of Tesla Inc. jumped around 6%
after the electric-car company reiterated its plans to sell more
vehicles during the second half of the year.
The pause in U.S. stocks comes a day after the Dow topped 22000
for the first time, its 32nd record of the year, as stocks
benefited from a buoyant global economy, a weaker dollar and a
solid earnings season.
In Europe, the British pound came under pressure after the Bank
of England kept interest rates unchanged, despite signaling that
the long era of easy money is gradually drawing to a close.
The British pound fell 0.7% to $1.3133. The pound started
falling in European afternoon trading when investors saw that only
two BOE officials had dissented in favor of a rate increase, said
Thu Lan Nguyen, analyst at Commerzbank AG. "Some anticipated there
would be three dissenting," she said.
The central bank also lowered its 2017 U.K. economic growth
forecast to 1.7% from 1.9% in May. The 2018 forecast was reduced to
1.6% from 1.7%.
"GDP growth remains sluggish in the near term, as the squeeze on
the households' real incomes continues to weigh on consumption,"
BOE Gov. Mark Carney said in a press conference after the rate
announcement, even as he said he anticipated raising interest rates
faster than investors currently expect.
Declines in the pound helped push the export-heavy FTSE 100
index up 0.8%, led by exporters such as Shire PLC, British American
Tobacco PLC and AstraZeneca PLC.
European stocks have struggled in recent sessions amid a
climbing euro and mixed corporate results. German conglomerate
Siemens AG fell 2.8% Thursday after its second results were
slightly weaker than analysts had expected. Italy's UniCredit SpA
was one of the biggest gainers, up 6% after it reported a higher
second-quarter profit.
In Asia, South Korean stocks led the way lower, with the Kospi
down 1.7% after recently topping highs set in 2011. A big pressure
point was Samsung Electronics, which fell 2.5% -- erasing its gains
for the week -- as the Samsung conglomerate's de facto head
testified for the first time at his corruption trial.
Some analysts said the prospect of higher corporate and personal
income taxes under the country's new leadership has also put
pressure on the index. South Korea's government is planning to
raise taxes on wealthy individuals and large companies, the first
increase in the country's corporate-tax rate since 1991.
Meanwhile, a decline in technology shares weighed down Asian
bourses after they climbed Wednesday following Apple's strong
quarterly report.
Japan's Nikkei and Hong Kong's Hang Seng fell around 0.3%, while
Taiwan's Taiex declined 0.5% after hitting 27-year highs a day
earlier.
Corrie Driebusch contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
August 03, 2017 10:24 ET (14:24 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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