Stocks fall as S&P 500 drops for 4th straight day
NEW YORK - U.S. stocks fell Tuesday as the market fallout of Trump’s travel ban on seven Muslim-majority countries continues to take a toll and investors digest weak fourth-quarter results from companies including UPS and Under Armour.
Industrial companies are down the most, but health care companies offset some of the losses. As they look for less risky investments, buyers are moving money into bonds and stocks that pay large dividends, like utilities.
The Standard & Poor's 500 index fell for a fourth straight day, its longest losing streak since before the presidential election in November. But the losses have been fairly small, and for the second day in a row, stocks recovered some of their losses late in the day.
The Standard & Poor's 500 index fell 2.03 points, or 0.1%, to 2278.87. The Dow Jones industrial average dropped 107.04 points, or 0.5%, to 19,864.09. The Nasdaq composite index was able to cut its losses and closed up 1.07 to 5614.79.
Fear returns to Wall Street after Trump border flap
Jim Paulsen, chief investment strategist for Wells Capital Management, said investors are looking for safer investments because the change from Barack Obama’s administration to Donald Trump’s has created so many changes in government.
“More than anything right now it’s just the pace of news. It is so dramatic,” he said.
The stock market made huge gains after Trump was elected last fall, and Paulsen said it’s not a surprise that investors would pull back, take some profits and move to safer investments at some point.
Trump’s travel ban on seven Muslim-majority countries over the weekend rattled investors on worries that future administration moves will make it harder for them to hire skilled, foreign-born workers. Trump also suspended the U.S. refugee program for 120 days and stopped all entry by Syrians into the U.S.
Another day of protests against parts of Trump’s agenda and challenges for some of his cabinet nominees who haven’t been confirmed by Congress made investors a bit more nervous. The VIX, an index known as Wall Street’s “fear gauge,” rose again after jumping Monday. It climbed 6 percent Tuesday to 12.58, which is up from 10 late last week but about the same as it was two weeks ago.
Bond prices rose as investors snapped up bonds. The yield on the 10-year Treasury note fell to 2.45% from 2.49%. That hurt financial stocks, as lower bond yields reduce interest rates and the profits those companies make from lending.
Investors who want income also bought stocks that pay outsize dividends, including real estate investment trusts and utility companies. Gains for those stocks limited the market’s losses overall.
In earnings news:
Athletic apparel maker Under Armour is plunging after investors were disappointed with its fourth-quarter report, which included higher expenses. Under Armour also issued a weak full-year forecast and said its chief financial officer is leaving. The stock tumbled $7.48, or 25.8 percent, to $21.46. It dropped 30 percent last year and is now trading at its lowest price in two years.
United Parcel Service sank after the package delivery company forecast an annual profit that was far smaller than analysts expected. UPS expects to earn no more than $6.10 a share this year while FactSet says experts expected $6.15 per share. UPS gave up $7.97, or 6.8 percent, to $109.06 and FedEx fell $4.16, or 2.2 percent, to $189.09. That helped pull industrial companies lower.
Drug company stocks rose after Trump said he wants less regulation on prescription drugs because that could speed up drug approvals. While Trump again said he wants to reduce drug prices, investors were pleased because reduced regulation and faster marketing could reduce the companies’ costs and boost their profits. The Nasdaq Biotech index climbed 2.3 percent.
U.S. crude oil rose 18 cents to $52.81 a barrel in New York. Brent crude, the benchmark for international oil prices, added 47 cents to $55.70 a barrel in London. However energy companies continued to decline. After big gains over the last year, especially in November and early December, energy companies have done worse than the rest of the market. Exxon Mobil lost $1.41, or 1.7 percent, to $83.46.
Germany’s DAX lost 1.3 percent and the CAC 40 of France fell 0.7 percent. The FTSE 100 index in Britain lost 0.3 percent. Japan’s benchmark Nikkei 225 dipped 1.7 percent. The South Korean Kospi lost 0.8 percent. Markets in Hong Kong, China and Taiwan were closed for Lunar New Year holidays.