ShareThis Page
Business Headlines

Dow industrials recede from 26,000 as early gains fade

| Tuesday, Jan. 16, 2018, 6:09 p.m.
A television screen on the floor of the New York Stock Exchange headlines the Dow Jones industrial average above 26,000, Tuesday, Jan. 16, 2018. The DJIA traded above 26,000 for the first time.
A television screen on the floor of the New York Stock Exchange headlines the Dow Jones industrial average above 26,000, Tuesday, Jan. 16, 2018. The DJIA traded above 26,000 for the first time.

Losses by industrial and technology companies helped pull stocks lower Tuesday, pulling the market back from its latest record highs.

The slide erased some of the gains from a broad rally earlier in the day that had sent the Dow Jones industrial average past the 26,000-point threshold for the first time.

Energy stocks also fell as crude oil prices declined. Health care stocks were among the gainers as investors sized up the latest company earnings and deal news following a long holiday weekend.

"We've come perhaps a little bit too far, too fast," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. "If you look at year-to-date performance, you have the broad popular indices up roughly 3 to almost 5 percent in two weeks' trading. That's a fairly torrid pace and a pace that we think is perhaps a little aggressive, so a little bit of a pause here would perhaps be constructive."

The Standard & Poor's 500 index fell 9.82 points, or 0.4 percent, to 2,776.42. The Dow lost 10.33 points, or 0.04 percent, to 25,792.86. It had been up as much as 282 points earlier. The Nasdaq shed 37.38 points, or 0.5 percent, to 7,223.69. The Russell 2000 index of smaller-company stocks gave up 19 points, or 1.2 percent, to 1,572.97.

"It got to a point where people were saying, 'Wow,'" said Steve Johnson, a portfolio manager at Adviser Investments. "It's momentum. You had everyone on TV saying we were up 1,000 points in seven trading sessions. People took profits on the short term and that took some members of the Dow down."

Bond prices rose. The yield on the 10-year Treasury fell to 2.54 percent from 2.55 percent late Friday.

The Dow's latest milestone-setting move happened shortly after the market opened Tuesday as investors weighed encouraging earnings from Citigroup and UnitedHealth Group.

It took the Dow seven trading days since it first closed above 25,000 on Jan. 4 to cross the 26,000-point threshold. That's faster than the 23 days it took the Dow to go from 24,000 to 25,000 points, which was a record thousand-point swing.

The milestone moment didn't last. The rally lost steam by early afternoon, ultimately pulling the Dow and the other major indexes into the red.

Even with Tuesday's reversal the stock market is off to a stellar start in 2018. The S&P 500 index has closed lower only one other day this year. It capped last week with its seventh weekly gain in the past eight.

Investors have been encouraged by strong global growth and rising company earnings. For the next few weeks, traders will have their eye on companies reporting results for the final quarter of 2017 for details on how the tax overhaul that took effect earlier this year will affect corporations.

Many companies are taking one-off charges for bringing home money held abroad, but traders expect them to benefit in the long run from the decision to cut the standard tax rate from 35 percent to 21 percent and are bidding up their share prices.

On Tuesday, Citigroup reported an $18.3 billion loss for the fourth quarter due to the new tax law. But excluding the one-time charges, Citigroup earned a profit. The stock added 27 cents to $77.11.

UnitedHealth Group gained 1.9 percent after its said earnings more than doubled in the final quarter of 2017. The nation's largest insurer also raised its forecast well beyond expectations, largely due to help from the federal tax overhaul. The stock picked up $4.26 to $232.90.

Elsewhere in the market, particularly with technology and industrial stocks, investors opted to sell.

"A big concern is the market right now is: 'Is tax reform priced in?'" said Lindsey Bell, investment strategist at CFRA Research.

Alliance Data Systems led the technology sector decliners, shedding $18.30, or 6.6 percent, to $258.07. General Electric was among the biggest laggards in the industrials sector. The conglomerate slid 2.9 percent after the company said it was taking a $6.2 billion charge related to its insurance portfolio. GE lost 55 cents to $18.21.

Viacom tumbled 7 percent after following several reports saying the media company is not in talks to merge with CBS Corp. The slide followed a sharp jump in Viacom Friday after a published report suggested that a merger might be a possibility. Viacom fell $2.38 to $31.38. CBS rose 60 cents, or 1 percent, to $59.43.

The price of bitcoin slumped, deepening its slide this year, after South Korea's top financial policymaker said that banning trading in digital currencies was an option.

Bitcoin sank 21.1 percent to $10,718 as of 4:48 p.m. on Tuesday, according to the tracking site CoinDesk. Bitcoin futures on the Cboe Futures Exchange settled 19.9 percent lower at $11,055. The futures allow investors to make bets on the future price of bitcoin.

The price of bitcoin soared last year after starting 2017 under $1,000, but has been hurt this year amid signs of potentially increased scrutiny from governments. Many finance pros believe bitcoin is in a speculative bubble that could burst any time.

Energy stocks also declined following a drop in crude oil prices. Range Resources lost 80 cents, or 4.6 percent, to $16.78.

Benchmark U.S. crude fell 57 cents to $63.73 per barrel. Brent crude, used to price international oils, shed 99 cents, or 1.4 percent, to $69.27.

Merck rose after the drugmaker announced positive results from a clinical trial for a lung cancer treatment. The stock led all the gainers in the S&P 500, climbing $3.41, or 5.8 percent, to $62.07.

Gold rose $2.20 to $1,337.10 an ounce. Silver added 5 cents to $17.19 an ounce. Copper was little changed at $3.22 a pound.

The dollar fell to 110.30 yen from 111.09 yen on Friday. The euro strengthened to $1.2271 from $1.2181.

In other energy trading, wholesale gasoline slipped 2 cents to $2.06 a gallon. Heating oil lost a penny to $1.84 a gallon. Natural gas fell 7 cents, or 2.2 percent, to $3.13 per 1,000 cubic feet.

Germany's DAX gained 0.3 percent and France's CAC 40 added 0.1 percent. London's FTSE 100 shed 0.2 percent.

Tokyo's Nikkei 225 added 1 percent, while Hong Kong's Hang Seng jumped 1.8 percent. Seoul's Kospi rose 0.7 percent.

TribLIVE commenting policy

You are solely responsible for your comments and by using 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.

click me