Riskier stocks continue decline
NEW YORK — Stocks fell back from record levels on Wednesday as investors decided it was better to play it safe.
A day after the Standard & Poor's 500 index climbed above 1,900 for the first time, investors turned their backs on stocks that would benefit more than others in a reviving economy. Consumer discretionary stocks, a group that includes luxury retailers and entertainment companies, dropped the most.
Industrial and technology companies also fell. And riskier, small-company stocks, which rebounded on Monday, resumed a sell-off.
Instead, investors bought safe and steady stocks. Utility and telecom stocks, which investors favor when the markets get choppy, rose the most in the S&P 500. U.S. government bonds also rallied, pushing the yield on the 10-year Treasury note to its lowest in more than six months, another sign that investors were favoring safer assets.
“There's some internal self-correction and rotation going on beneath the surface,” said Jim Russell, a regional investment director at US Bank. Russell said stocks were getting closer to being fairly valued.
The Standard & Poor's 500 index fell 8.92 points, or 0.5 percent, to 1,888.53.
The Dow Jones industrial average dropped 101.47 points, or 0.6 percent, to 16,613. The Nasdaq composite fell 29.54 points, or 0.7 percent, to 4,100.63.
The Russell 2000 index, a gauge of small-company stocks, fell 18.02 points, or 1.6 percent, to 1,103.14. The index has slumped 9 percent since peaking on March 4 as investors have begun to sell riskier stocks.
Bonds benefited from investors' appetite for less-risky assets.
The yield on the 10-year Treasury note, which falls when the price of the bond rises, dropped to its lowest since October. The yield declined to 2.54 percent from 2.61 percent late Tuesday.
“People are rotating out of equities and into bonds,” said Mark Pibl, U.S. fixed-income strategist at wealth management firm Canaccord Genuity.
Bonds have surged this year because inflation remains low and investors have become concerned that the economy may not grow as quickly as previously anticipated.
Barclays' index of Treasury bonds maturing in 20 years or more has gained 10.6 percent, outperforming the 2.2 percent rise for the S&P 500 stock index.
In corporate news, Fossil, a maker of watches, jewelry and accessories, was the biggest decliner in the S&P 500.
Fossil fell $11.45, or 10.3 percent, to $100.
The company said late Tuesday that its first-quarter net income fell 8 percent, despite sales gains across all its business segments. The results beat market expectations, but the company gave a weak forecast.
Deere was another company to decline after reporting earnings. The maker of farm equipment fell $1.91, or 2 percent, to $91.70. The company reported a decline in second-quarter net income because of weaker demand for its products. The company cut its full-year sales forecast.
Almost all of the companies in the S&P 500 have finished reporting their first-quarter earnings. Earnings rose 3.3 percent for the period, according to S&P Capital IQ. That compares with growth of almost 8 percent in the fourth quarter.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Overhaul possible for West Mifflin’s Century III Mall
- Chevron settles fatal shale well fire lawsuit, state claims for nearly $6M
- No end in sight for casino market saturation in northeastern U.S.
- UPMC offering buyouts to 3,500 employees in cost-cutting move
- Weak first-quarter economic report anticipated
- Asian sell-off, Greece uncertainty rattle Wall Street
- EDMC to close quarter of its Art Institute campuses, but Pittsburgh’s spared
- Citizens Bank executive kept busy by spinoff
- Beaver Valley nuclear reactor returns to service
- IRS cybersecurity breach touches lives of homebuyers, others
- Task force to plot ways of easing gas glut in Pennsylvania via pipelines