Dow Loses Steam After Six Sessions of Gains
February 20 2018 - 12:37PM
Dow Jones News
By David Hodari and Michael Wursthorn
-- Volatility returns to stocks
-- Bond yields continue to climb
-- Consumer staples slide
Falling shares of Walmart pulled the Dow Jones Industrial
Average lower Tuesday, putting the blue-chip index on track for its
first loss in seven trading sessions.
The Dow fell 76 points, or 0.3%, to 25144 in recent trading,
while the S&P 500 was flat after paring an earlier decline. The
Nasdaq Composite edged 0.6% higher.
Shares of Walmart tumbled more than 9% after the retailer
reported slowing online sales growth, indicating its difficulty in
fending off competition from Amazon.com. That drop took roughly 68
points off Dow industrials and contributed to a 1.7% decline among
shares of consumer-staple stocks in the S&P 500.
Gap also weighed on the S&P 500, with shares down 3.6% after
the company said it would replace the president and chief executive
of its flagship Gap brand as it looks to boost sales.
Other retailers traded lower as well, including Target, down
3.4%, and Macy's, off 1%.
That offset gains among chip makers, several of which were
trading higher after Qualcomm raised its bid for NXP
Semiconductors, as it sought to fend off a hostile takeover
approach by Broadcom. Shares of NXP climbed more than 6%, while
Broadcom gained 2.5%. Qualcomm fell 1.7%.
Despite Tuesday's struggles, stocks were on firmer footing after
having recovered most of the value shed earlier this month, as
mostly upbeat corporate earnings and a belief in continued global
growth have kept investors from engaging in deeper selling.
Both the Dow and the S&P 500 climbed more than 4% last week,
giving the indexes their biggest weekly increases since 2013 and
2016, respectively.
That helped the Dow recover roughly half of its more than 10%
decline from its January peak. Still, investors are reacquainting
themselves with a market force that was absent for much of last
year: volatility.
"What we're seeing now is more normal market behavior," said
Cooper Abbott, president and chairman of Carillon Tower Advisers, a
$64 billion asset-management firm, of the increased volatility.
"It's frankly healthy for markets to have this kind of
adjustment."
Rising inflation in the U.S. has prompted investors to
second-guess central bank guidance amid speculation that those
institutions will speed up the wind-down of easy-money policies
that helped fuel the stock market's climb in recent years, said
Larry Hatheway, chief economist at GAM Investments.
Meanwhile, U.S. Treasury yields continued to climb. The yield on
the benchmark 10-year U.S. Treasury note was recently up to 2.902%,
according to Tradweb, from last week's closing level of 2.877%,
which marked a four-year high. Bond yields move inversely to
prices.
Elsewhere, the Stoxx Europe 600 added 0.6%. Japan's Nikkei
closed 1% down, giving up some of its early-week rise thanks to the
weakness of its electronics and banking sectors.
With Chinese and Taiwanese markets still closed for the Lunar
New Year holiday, the Hang Seng Index closed down 0.8% in its first
full day of trading, while South Korea's Kospi fell 1.1%.
Write to David Hodari at David.Hodari@dowjones.com and Michael
Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
February 20, 2018 12:22 ET (17:22 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.