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Wednesday, December 6, 2023

US stocks bounce back to finish almost unchanged

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US stocks have come back from an early loss on Wall Street and finished almost unchanged.

Technology companies like Apple and Microsoft took big losses on fears about their overseas revenue, but bank stocks continued to surge along with bond yields.

Technology stocks have been weak since last week’s presidential election, and they fell further on Monday as investors wondered if Donald Trump’s policies as president will hurt their sales in China and other markets overseas.

Bank stocks built on their post-election gains as bond yields continued to rise. That paves the way for banks to make more money from lending, and government bond yields are at their highest levels since January.

“The market is sniffing out the belief that some of these Trump policies may drive some better economic growth but also may in fact be somewhat inflationary,” said PNC chief investment strategist Bill Stone.

The Dow Jones industrial average gained 21.03 points, or 0.1%, to close at 18,868.69, another all-time high. The Standard & Poor’s 500 index dipped 0.25 points to 2,164.20 after it fell as much as 0.4% earlier. The Nasdaq composite sank 18.72 points, or 0.4%, to 5,218.40.

Technology companies fell sharply, with familiar names taking some of the largest losses. Apple gave up 2.72 dollars, or 2.5%, to 105.71 dollars, while Facebook declined 3.94 dollars, or 3.3%, to 115.08 dollars, and Microsoft slid 90 cents, or 1.5%, to 58.12 dollars. Alphabet, the parent company of Google, slipped 18.53 dollars, or 2.4%, to 753.22 dollars.

Bond prices fell and yields jumped as investors anticipated that Mr Trump’s spending plans would lead to higher inflation and more government borrowing. The yield on the 10-year US Treasury note climbed to 2.25% from 2.14% late on Thursday.

Bond trading was closed on Friday for the Veterans’ Day holiday. The day before the November 8 election, the yield was 1.83%. That is a huge move for the benchmark rate.

Goldman Sachs rose 5.24 dollars, or 2.6%, to 209.18 dollars, and Bank of America rose 1.06 dollars, or 5.6%, to 20.08 dollars. JPMorgan Chase picked up 2.82 dollars, or 3.7%, to 79.51 dollars.

Mr Stone said investors are focused on potential corporate and individual tax cuts, a “wave of deregulation” that eliminates some of the rules governing businesses like energy companies and banks, and more protectionism on trade, which could hurt sales for companies that do a lot of business overseas.

Investors are also pleased at the prospect of looser regulation and bigger profits. For example, Mr Trump’s election could result in big changes to the Dodd-Frank financial reform bill or to the Consumer Financial Protection Bureau.

Mr Stone added that corporate dealmaking could increase if Mr Trump’s administration takes a looser approach to antitrust regulation. Several companies announced deals or deal offers on Monday.

South Korean conglomerate Samsung said it will buy Harman International for 8 billion dollars, or 112 dollars a share. Harman makes electronics for cars including audio systems and safety and entertainment features. Its stock jumped 22.07 dollars, or 25.2%, to 109.72 dollars.

German industrial equipment company Siemens agreed to buy software maker Mentor Graphics for 4.5 billion dollars, or 37.25 dollars a share. Mentor’s stock rose 5.61 dollars, or 18.3%, to 36.29 dollars.

Shares in communication adapter maker Digi International rose 1.75 dollars, or 15%, to 13.40 dollars after the company said it had received an offer from Belden, a communications equipment company. Digi said it rejected the bid of 13.82 dollars a share, or about 359 million dollars, because it is too low. Belden stock added 1.52 dollars, or 2.2%, to 71.22 dollars.

The dollar rose against other currencies as US interest rates rose. It jumped to 108.51 Japanese yen from 106.78 yen. The euro fell to 1.0726 dollars from 1.0845 dollars.

Investors are also selling companies that pay big dividends like utilities and phone companies as bonds become more appealing to investors seeking income. Verizon fell 51 cents, or 1.1%, to 46.18 dollars, and American Electric Power lost 1.27 dollars, or 2.1%, to 58.72 dollars.

Oil prices bounced back from a big loss early on. Benchmark US crude slipped just 9 cents to 43.32 dollars a barrel in New York. Brent crude, used to price international oils, lost 32 cents to 44.43 dollars a barrel in London.

In other energy trading, wholesale gasoline lost 3 cents to 1.28 dollars a gallon. Heating oil fell 2 cents to 1.39 dollars a gallon. Natural gas jumped 13 cents, or 5%, to 2.75 dollars per 1,000 cubic feet.

Gold fell 2.60 dollars to 1,221.70 dollars an ounce. Silver lost 49 cents, or 2.8%, to 16.89 dollars an ounce. Copper picked up 1 cent to 2.52 dollars a pound.

France’s CAC 40 rose 0.4% and Germany’s DAX added 0.2%. The FTSE 100 index of leading British shares closed 0.3% higher. In Japan the Nikkei 225 jumped 1.7% after a strong reading on Japan’s economic growth. The Kospi in South Korea lost 0.5% and Hong Kong’s Hang Seng slipped 1.4%.

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