U.S. Stocks on Track to End Winning Streak
September 21 2017 - 1:40PM
Dow Jones News
By Riva Gold and Michael Wursthorn
-- U.S. stocks edge lower
-- Government bond prices, utilities stocks rise
-- European, Asian shares rise slightly
Declines in shares of technology and consumer-staple stocks
threatened to end major indexes' run of recent gains on
Thursday.
The Dow Jones Industrial Average slipped 36 points, or 0.2%, to
22376, on track for declines after nine consecutive sessions of
advances. The S&P 500 fell 0.2%, while the tech-heavy Nasdaq
Composite fell 0.3%.
Some investors and analysts attributed the pause in stocks to
lingering uncertainty after the latest Federal Reserve policy
decision. The Fed's suggestion on Wednesday that it would leave the
possibility open for a rate increase in December caught some
investors off guard, portfolio managers said.
Low interest rates have helped keep U.S. stocks climbing since
the financial crisis. A Fed that raises rates faster than the
economy can support could cause the stock rally to stall, investors
say.
"The market is sorting through to what extent it needs to
incorporate future Fed activity into its thinking," said Mike
Allison, a portfolio manager with Eaton Vance. "There's some
uncertainty as to the impact since interest rates have been so low
for so long."
Technology stocks in the S&P 500 fell 0.5% on Thursday, with
chip makers suffering some of the steepest declines due, in part,
to a rising dollar and its impact on multinational companies, some
traders and investors said.
Nvidia shed 3.3%, while Skyworks Solutions and Broadcom were
both off more than 1%.
Shares of Apple continued to fall after the company acknowledged
problems with cellular connectivity in its newest smartwatch. Apple
was recently down 1.3%, putting it on track for its worst two-day
stretch since June.
Shares of consumer staple companies also broadly declined, led
by grocer Kroger, down 2%, and Coty, which fell 3.4%.
Meanwhile, government bonds and their stock-market proxies
rose.
Utilities shares, considered bondlike because of their hefty
dividends, added 0.2% in the S&P 500. Meanwhile, the yield on
the benchmark 10-year U.S. Treasury note edged down to 2.268%,
according to Tradeweb, from 2.276% on Wednesday. Yields fall as
bond prices rise.
While the Fed's plan to start shrinking its $4.2 trillion
portfolio of mortgage and Treasury bonds was largely expected, some
investors said the central bank's indication that it remained on
track to raise interest rates later this year raised concerns
around a mistake that could send markets tumbling.
"It seems like the Fed is on a modestly earlier time frame than
we had thought," said Jason Pride, director of investment strategy
for Glenmede Trust Co. "As with any policy tightening scenario, you
introduce the risk of a misstep due to the inability to measure the
impact correctly."
Meanwhile, many investors are now looking ahead to any policy
developments in Washington that could provide further direction for
markets.
"I think imminently we will start to price in a tax cut or tax
reform," said Eddie Perkin, chief equity investment officer at
Eaton Vance.
"Now is a time to be selling what has worked this year and
buying what has lagged," he said, noting he is preparing for a
rotation out of technology and health-care company shares and into
banks and companies currently hardest hit by taxes.
Elsewhere, the Stoxx Europe 600 rose 0.2%, led by a 1.4% advance
in bank stocks.
Japan's Nikkei Stock Average edged up 0.2% after the Bank of
Japan left its policy unchanged Thursday, sticking to its massive
stimulus program.
-- Kenan Machado contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
September 21, 2017 13:25 ET (17:25 GMT)
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