Stocks Fizzle and Flatten Out at Midday after Early Gains
NEW YORK (AP) — U.S. stocks gave up early gains and flattened in midday trading Tuesday on Wall Street, weighed down by technology and industrial companies.
The pullback threatens to end a five-day winning streak that has so far helped recoup much of May’s sharp losses. Around midday, stocks were nearly evenly split between winners and losers.
A slide in industrial stocks helped trim the early gains. Defense contractors were the biggest decliners, marking a turnaround from a day earlier when a megadeal between Raytheon and United Technologies gave the sector a lift.
Technology stocks turned lower after leading the market earlier. Adobe fell 2.4% and Advanced Micro Devices fell 3.5%.
Consumer-related stocks and internet companies balanced the market with gains. Facebook rose 1.6% and Verizon gained 2.1%. Walgreens rose 1.6% and Dollar Tree rose 2.3%.
Banks maintained their gains as lower bond prices pushed treasury yields higher. The sector suffered in May as investors fled to the safety of bonds and pushed yields lower, threatening to reduce the profit banks make from loans. Higher yields help push interest rates higher, generating more profits. Bank of America and Citigroup rose 0.6%.
Stocks had been rallying since last week, when the Federal Reserve signaled that it is open to cutting rates to stabilize the economy if trade disputes threaten the economic recovery. Investors grew more hopeful Monday after President Donald Trump suspended plans to impose tariffs on Mexican goods after the countries struck a deal on immigration. Trump also plans to meet with Chinese President Xi Jinping in Japan later this month to discuss the two countries’ ongoing trade war.
KEEPING SCORE: The S&P 500 index fell 0.1% as of 12:15 p.m. Eastern time. The Dow Jones Industrial Average fell 26 points, or 0.1%, to 26,041. The Nasdaq composite fell 0.2%.
TRIMMING THE (FAUX) FAT: Beyond Meat fell 20% after J.P. Morgan’s Ken Goldman and James Allen downgraded the stock to “neutral.” The downgrade follows a surge in the stock price from $25 to $167 since the maker of plant-based meat alternatives started trading publicly on May 2.
The sharp rise in price cost short sellers about $400 million, according to the research firm S3.
In a note to clients Tuesday, Goldman and Allen said the downgrade was “purely a valuation call.”
HAPPY RETURNS: Tax preparer H&R Block rose 2% after hitting investors with a triple-dose of solidly good news. The company beat fiscal fourth quarter profit expectations, raised its quarterly dividend and announced an acquisition.
GOOD GRUB: GrubHub jumped 6.7% after the online food service company got some relief from competitive pressures.
Amazon is closing its U.S. restaurant delivery service, a 4-year-old business that failed to take off. The sector is highly competitive and includes Uber Eats and Door Dash, along with GrubHub and others.
The service, called Amazon Restaurants, offered delivery in more than 20 cities in the U.S. It was expanded into the United Kingdom, but Amazon shut it down late last year.
DEFENSE DOWN: Defense contractors dragged down the broader industrial sector. The slide marks a reverse from a day earlier when Raytheon and United Technologies announced a megadeal that will create a defense contracting powerhouse. Raytheon fell 5.4% and United Technologies fell 4.3%
Several other defense contractors turned lower in midday trading. Lockheed Martin fell 2.9% and Northrop Grumman fell 3.9%.
By AP reporter Damian J. Troise