May 20, 2018

Wall Street falls as high bond yields, sinking health stocks weigh

02 February 2018, 09:09 | Kenneth Drake

Wall Street slips at open, Apple weighs

US stocks retreat from records ahead of packed week for corporate earnings

Healthcare stocks pulled the major indexes lower on news that Inc (AMZN.O), Berkshire Hathaway Inc (BRKa.N) and JP Morgan Chase & Co (JPM.N) will jointly form a healthcare company to help control costs for their United States employees. By notching another month of gains in January, the Dow and S&P 500 are on track to extend their win streaks to 10.

The Nasdaq Composite was down 12.48 points, or 0.17 per cent, at 7,493.29.

The Dow Jones Industrial Average fell 362.59 points, or 1.37 percent, to 26,076.89, the S&P 500 lost 31.1 points, or 1.09 percent, to 2,822.43 and the Nasdaq Composite dropped 64.02 points, or 0.86 percent, to 7,402.48.

"Investors' confidence remains strong and it is likely to strengthen".

The economic backdrop continues to look positive.

"Investors are catching up to the fact that rates have risen", said Jonathan Mackay, investment strategist at Schroders.

In the broad market, the health care, energy and financial sectors led losses for the day. The firm exceeded sales and profit expectations in the most recent quarter.

Stock indexes ended slightly higher Wednesday after overcoming a brief afternoon stumble.

The technology sector's 0.50 per cent drop weighed the most on the markets, but the biggest decliners were the defensive sectors - utilities, real estate and telecoms, all down more than 0.8 per cent as U.S. 10-year treasury yields hit their highest since 2014.

"We've had a long run in the stock market, and we've seen some unease, but that could be reversed with a couple of good days", said Hellwig.

U.S. Treasury yields climbed to multi-year highs after the start of the Federal Reserve's two-day meeting, which could shed light on the central bank's economic and rate hike outlook.

The bank is about to undergo a change of leadership as Janet Yellen, who is viewed as favouring low interest rates, steps down.

Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move.

Wall Street is rebounding from the worst two-day tumble since President Trump's election. The market still has some room to price in more interest-rate increases in the coming years to match the Fed's projections, she noted. The aerospace giant has been the biggest gainer in the Dow Jones industrial average over the past year. Declines from telecommunications-equipment maker Ericsson, fashion retailer Hennes & Mauritz and United Kingdom outsourcing group Capita - which shed 43% after suspending its dividend and issuing a profit warning - helped offset gains in Swedish household-appliance maker Electrolux.

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