Technology Stocks Drag the Market Lower in Early Trading
NEW YORK (AP) — U.S. stocks moved broadly lower in early trading Tuesday as investors again back away from technology companies.
Technology stocks led the losses in the S&P 500 for a second straight day. Microsoft fell 1.8% and PayPal shed 2.7%. The shift contrasts with the last few weeks, when the sector was the key to much of the market gains.
Health care stocks were also among the biggest losers. Merck shed 5% and Abbott fell 3.1%. Merck and other pharmaceutical companies have been updating investors with the latest data on developing lung cancer treatments at a medical conference in Spain.
A mix of consumer product makers and consumer-focused stocks also fell. McDonalds shed 3.5% and Colgate-Palmolive fell 2.2%.
Rising bond yields pushed bank stocks higher and placed financial holdings among the few sectors to notch gains in the early going. JPMorgan Chase and Bank of America rose 1.3%. Banks rely on higher yields to set more lucrative interest rates on loans.
The yield on the 10-year Treasury rose to 1.65% from 1.62% late Monday.
Energy companies also eked out gains.
The broader market has generally been gaining ground for two weeks as investors remain confident in the strength of the economy, despite the lingering trade war between the U.S. and China. The feud between the world’s two largest economies has been injecting doses of volatility into the market as both sides escalate and then pull back. Recent plans for trade talks to resume in October raised some hope on Wall Street for a resolution.
Meanwhile, investors continue to watch the steady flow of economic data for a clearer picture of the U.S. economy’s health. Recent reports have been a mixed bag.
The Labor Department will report the latest consumer price index figures on Wednesday and the Commerce Department will report August retail sales data on Friday. Economists continue to expect the Federal Reserve to cut interest rates at its meeting next week to help maintain U.S. economic growth.
KEEPING SCORE: The S&P 500 index fell 0.6% as of 10:03 a.m. Eastern time. The Dow Jones Industrial Average fell 71 points, or 0.3%, to 26,760. The Nasdaq fell 0.9%.
OVERSEAS: Stocks in Europe moved lower. Britain’s planned Oct. 31 exit from the European Union remains a key concern for investors. Britain could face economic and trade chaos if it exits the group of nations without some kind of deal to regulate trade and other issues with members of the EU. Investors are also concerned that the departure could worsen a slowdown in growth throughout the continent and they expect the European Central Bank to unveil new monetary stimulus measures on Thursday to help shore up the region’s economy.
Markets in Asia were mixed.
BREAKFAST MONEY: Wendy’s fell 9.6% after the fast-food chain cut its profit growth forecast because of plans to expand its breakfast options nationwide. It plans to invest $20 million this year in the expansion and expects up to 6.5% profit growth instead of 7% growth. Wendy’s also told investors that it will update its goals for 2020.
ENGINE TROUBLE: Ford fell 3.5% after credit rating service Moody’s cut the automaker’s credit rating to junk status. Moody’s is concerned that the company will be weighed down by weak earnings and cash generation as it restructures. The move by Moody’s makes it more costly for Ford to borrow money because it is considered a high credit risk.
By AP reporter Damian J. Troise