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While you were sleeping: UPDATED US stocks fall, bond selloff stalls

Investors reassess their post-US election bets.

Margreet Dietz
Thu, 17 Nov 2016

Wall Street fell with bank stocks, while some tech shares including Apple continued a rebound from their recent slide, as investors reassessed their post-US election bets.

Government bonds also steadied after their recent selloff.

At the close, the Dow Jones Industrial Average shed 54.92 points, or 0.3%, to 18,868.14. The Dow closed at an all-time high on Tuesday. 

The Standard & Poor's 500 Index fell 0.2% to 2176.84, while Nasdaq Composite Index added 0.2%.

"As much as we love to believe all the pro-business things the new administration and the Republican Congress is going to move forward with, that's still next year's business," Boston-based Wunderlich Securities chief market strategist and director of research Art Hogan told Bloomberg.

"You have to look at a market that in the short term is getting stretched."

Banks pull down Dow
The Dow moved lower as declines Goldman Sachs and JPMorgan Chase shares, down 2.3% and 2.3% respectively, outweighed gains in Apple and Visa shares, up 2.4% and 1.7% respectively.

"Investors should book gains and wait for more evidence that the structural improvement in macro trends and regulations will materialise," brokerage Baird said of the post-election rally in bank stocks, according to Reuters.

Bucking the trend, shares of Target traded 7.2% higher after it posted a quarterly profit that surpassed expectations and upgraded its full-year forecast.

The latest quarterly earnings "reflect meaningful improvement in our traffic and sales trends and much stronger than expected profitability," Target chief executive Brian Cornell says.

US government bond prices edged up, ending a six-session run of declines, as tepid economic data helped ease selling.

The yield on the benchmark 10-year Treasury note was 2.222%, compared with 2.240% on Tuesday. Yields fall as prices rise.

Wholesale prices weaken
While bets remain firmly in favour of a Federal Reserve interest rate increase in December, a Labour Department report shows wholesale prices in the US were weaker than expected last month. The producer price index was unchanged from September, after a 0.3% increase the previous month.

Separately, a Fed report shows factory production rose 0.2% in October, following a similar increase in September.

"With the global economic backdrop more stable and growth set to pick up in the United States, we expect to see activity in the manufacturing sector improve a bit in the coming months," North Carolina-based Wells Fargo senior economist Tim Quinlan told Reuters.

In Europe, the Stoxx 600 Index ended the day with a 0.2% decrease from the previous close. The UK's FTSE 100 Index fell 0.6%, Germany's DAX Index slid 0.7%, while France's CAC 40 Index dropped 0.8%.

Opec officials are working to nail down details of their plan to limit oil supply and gaps over some sticking points are narrowing, Reuters reported.

"There is definitely somebody that thinks that there is a risk of having higher prices in the first half of 2017," Olivier Jakob, managing director of Petromatrix in Zug, Switzerland, told Bloomberg.

"It's saying that somebody in the market is either hedging for potentially higher prices in 2017, or somebody is taking a bet that prices will be higher next year."



Margreet Dietz
Thu, 17 Nov 2016
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While you were sleeping: UPDATED US stocks fall, bond selloff stalls