Technology companies, banks lead rebound for US stocks
A rebound in technology companies and banks helped reverse an early slide for U.S. stocks Thursday, breaking a five-day losing streak for the market.
Health care and industrial stocks also rose, offsetting losses in retailers, homebuilders, utilities and other sectors. Energy stocks also helped lift the market as the price of U.S. crude oil rose for the second straight day.
British bank stocks plunged and the British pound slumped amid discord over a new deal for Britain’s departure from the European Union next Spring.
The late-afternoon market rebound marked the latest episode of volatile trading for the market this week.
“We’re going back and forth between days when investors are taking risk-off and days when they’re taking risk back on,” said Jason Pride, chief investment officer of private clients at Glenmede. “We’re probably going to go through a period of this basically because it’s hard for investors to figure out where we are at this stage of the economic cycle.”
The S&P 500 index rose 28.62 points, or 1.1 percent, to 2,730.20. The Dow Jones Industrial Average gained 208.77 points, or 0.8 percent, to 25,289.27. The Nasdaq composite climbed 122.64 points, or 1.7 percent, to 7,259.03. The Russell 2000 index of smaller companies picked up 21.62 points, or 1.4 percent, to 1,524.12.
Thursday’s market rebound coincided with a Financial Times report citing unnamed sources that said the United States’ trade representative, Robert Lighthizer, has told some executives that a planned escalation in January of U.S. tariffs on imported goods from China are now on hold.
“This bit of information helped to move the market higher today, especially technology stocks,” said Quincy Krosby, chief market strategist at Prudential Financial.
The Trump administration has imposed a 10 percent tariff on $200 billion of Chinese goods over complaints Beijing steals or pressures foreign companies to hand over technology as the price of market access. That tariff had been due to rise to 25 percent in January. Another $50 billion of Chinese goods already is subject to 25 percent duties. Beijing has responded with penalty duties on $110 billion of American goods.
Washington and Beijing resumed talks over their spiraling trade dispute this week ahead of a meeting between Presidents Xi Jinping and Donald Trump, China’s Commerce Ministry said Thursday.
Technology sector stocks accounted for much of the market’s gain. Cisco Systems rose 5.5 percent to $46.77 a day after the company reported quarterly results that topped Wall Street’s forecasts.
Financial sector stocks rebounded after taking heavy losses a day earlier. JPMorgan Chase gained 2.6 percent to $110.07.
Several big retailers slumped. Dillard’s slid 14.8 percent to $62.85 after the retailer’s quarterly earnings fell far short of what investors were expecting. Macy’s gave up 2.9 percent to $32.27. Nordstrom dropped 3.5 percent to $58.99.
Traders also unloaded shares in homebuilders. KB Home had its steepest drop in more than three years after the homebuilder said new-home orders are down sharply in its current quarter versus a year ago.
The Los Angeles-based company’s revenue projection for the quarter also fell below analysts’ estimates. The stock plunged 15.3 percent to $17.61. Shares in other major homebuilders also skidded. Toll Brothers declined 5.9 percent to $29.94, while Lennar lost 5 percent to $39.53.
While a strong economy and job market helped boost home sales earlier this year, rising mortgage rates and home prices are becoming hurdles for many would-be buyers. The annual rate of new U.S home sales has dropped 15.3 percent since May, eliminating much of the strength in sales from the first five months of 2018.
Power provider Pacific Gas & Electric plunged for the sixth-straight day as concerns mounted over whether it could sustain losses related to the devastating wildfire in Northern California, which started Nov. 8 and has killed at least 56 people.
The company’s stock price has plunged 63 percent since Nov. 8, wiping out $15.6 billion of market value. PG&E stock was the biggest decliner in the S&P 500 index Thursday. It sank 30.7 percent to $17.74.
Oil prices closed higher for the second straight day. Benchmark U.S. crude rose 0.4 percent to settle at $56.46 a barrel in New York. Brent crude, used to price international oils, gained 0.8 percent to close at $66.62 a barrel in London.
Despite the latest pickup, U.S. crude oil is still down about 13.5 percent for the month. The average price for a gallon of gasoline in the U.S. has dropped to $2.67 from $2.89 a month ago, according to AAA.
Natural gas, which spiked Wednesday amid forecasts calling for a cold snap across much of the Northeast and South, slumped 16.5 percent to $4.04 per 1,000 cubic feet.
In other energy trading, heating oil fell 1 percent to $2.07 a gallon and wholesale gasoline slid 0.3 percent to $1.56 a gallon.
Energy stocks got a boost from the pickup in oil prices. Noble Energy gained 3.1 percent to $29.50.
Bond prices rose. The 10-year Treasury fell to 3.11 percent from 3.12 percent late Wednesday.
The dollar rose to 113.58 yen from 113.51 yen on Wednesday. The euro strengthened to $1.1348 from $1.1338. The pound weakened to $1.2791 from $1.3038.
The price of gold gained 0.4 percent to $1,215 an ounce. Silver rose 1.3 percent to $14.26 an ounce. Copper added 1.3 percent to $2.75 a pound.
Major European stock indexes closed mostly lower following a flare-up in discord over British Prime Minister Theresa May’s plan for Britain’s departure from the European Union next year. She persuaded a majority in her Cabinet to back an agreement that would allow Britain to stay in a customs union while a trade treaty is negotiated, but the deal faces an uncertain fate in Parliament and two of her Cabinet ministers, including the Brexit minister, resigned in protest.
The disarray surrounding the process sent the pound lower and hit British bank stocks. Barclay’s slid 5.1 percent to $8.54 and Royal Bank of Scotland slumped 8.9 percent to $5.93.
Germany’s DAX dropped 0.5 percent and France’s CAC 40 shed 0.7 percent. London’s FTSE 100 rose 0.1 percent. In Asia, Hong Kong’s Hang Seng added 1.7 percent and Tokyo’s Nikkei 225 gave up 0.2 percent. Seoul’s Kospi gained 1 percent.