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Slight fall in US stocks as investors stay cautious amid rates cut

Published 04/08/2016

The Dow Jones industrial average slipped 2.95 points to 18,352.05
The Dow Jones industrial average slipped 2.95 points to 18,352.05

US stocks wavered on Thursday and finished barely higher as an interest-rate cut by the Bank of England proved not to be enough to get investors out of their recent cautious mode.

Technology companies continued to make the biggest gains and oil prices rose for the second day in a row.

Bank stocks fell the most as the interest-rate cut suggests they will not be able to make as much money on lending.

Quincy Krosby, market strategist at Prudential Financial, said investors were playing it safe as they waited for the Labour Department's July employment report.

Hiring in June was stronger than expected, but that followed shockingly weak job growth in May.

"The market has been surprised before and wants to make sure that they're prepared in either direction," Mr Krosby said.

"To get the market to move higher you need an underpinning of stronger economic growth."

The Dow Jones industrial average slipped 2.95 points to 18,352.05.

The Standard & Poor's 500 index inched up 0.46 points to 2,164.25 while the Nasdaq composite rose 6.51 points to 5,166.25.

The Bank of England cut interest rates to new lows and unveiled a raft of stimulus measures that include resuming a bond-buying programme to pump money into the economy and offer cheap loans to banks.

The measures seemed to exceed investors' expectations and the bank said the measures could be expanded later if it proves necessary.

The Bank of England is trying to counter the shock of the UK's vote in late June to leave the European Union.

The pound fell to 1.3116 US dollars from 1.3317 dollars on Wednesday.

Bank shares also lost ground as lower interest rates reduce the amount of money they can make from lending.

Technology stocks have done better than the broader market in the spring and summer, and on Thursday they were led higher by companies including Facebook and communications chipmaker Broadcom.

Facebook rose 1.85 dollars (£1.41), or 1.5%, to 124.36 dollars (£94.89), and Broadcom gained 2.88 dollars (£2.19), or 1.8%, to 166.99 dollars (£127.42).

Mobile payments company Square climbed after it reported strong second-quarter results and raised its projections for the year. The stock rose 88 cents (67p), or 8.4%, to 11.32 dollars (£8.63).

Benchmark US crude rose 1.10 dollars (83p), or 2.7%, to 41.93 dollars (£31.99) a barrel in New York after a 3% climb on Wednesday.

Brent crude, a benchmark for international oil prices, added 1.19 dollars (90p), or 2.8%, to 44.29 dollars (£33.79) a barrel in London.


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