Stocks fall as Wall Street braces for French election and tax cuts
US stocks fell on Friday as investors looked ahead to the French election and also took on board President Donald Trump's pledge to cut taxes.
Financial and health care companies moved lower while industrial companies rose - with stocks continuing the up-and-down pattern they have been stuck in for the last month.
Stocks slumped in morning trading as banks fell in tandem with bond yields and interest rates and energy companies sank with oil prices.
Strong results from Honeywell and aviation electronics maker Rockwell Collins helped industrial firms. Toy maker Mattel plunged after it reported is second disappointing quarter in a row.
Stocks climbed in the final minutes of trading and left the Standard & Poor's 500 index 1 per cent higher for the week.
President Trump gave the market a fleeting boost in the afternoon when he said his administration will release a tax reform proposal next week that includes a large tax cut. He did not provide details.
"I don't think anything's actually going to happen or be implemented any time soon," said Scott Wren, senior global equity strategist for the Wells Fargo Investment Institute.
He said he thinks a corporate tax cut is more likely to pass Congress and become law than a tax cut for individuals, and added that he wants the administration to focus on moves that can keep the economy growing.
The Standard & Poor's 500 index lost 7.15 points, or 0.3 per cent, to 2,348.69. The Dow Jones industrial average dipped 30.95 points, or 0.2 per cent, to 20,547.76. The Nasdaq composite fell 6.26 points, or 0.1 per cent, to 5,910.52. The Russell 2000 index of smaller-company stocks fell 4.30 points, or 0.3 per cent, to 1,379.85.
Financial companies fell. Professional services firm Marsh & McLennan skidded 1.41 dollars, or 1.9 per cent, to 71.88 dollars and wealth management company Morgan Stanley dipped 70 cents, or 1.6 per cent, to 41.80 dollars. Bank of America fell 36 cents, or 1.6 per cent, to 22.7 dollars.
Bond prices rose early on but wound up little changed. The yield on the 10-year Treasury note remained at 2.24 per cent.
Health care companies moved lower. Biotech drugmaker Alexion Pharmaceuticals lost 1.90 dollars, or 1.6 per cent, to 116.82 dollars and Merck declined 66 cents, or 1.1 per cent, to 61.89 dollars. Pharmacy benefits manager Express Scripts dipped 59 cents to 66.46 dollars.
Stocks did well this week, but they have wandered up and down over the last few weeks but that may persist.
Next Friday the government will release its report on first-quarter GDP growth, something investors pay a lot of attention to. On the same day, the federal government is scheduled to reach its borrowing limit, which could trigger a government shutdown unless Congress agrees to extend it.
"The stock market's been willing to wait to see what, if anything, comes out of Washington," said Wells Fargo's Wren. He adds that stock prices are not too high even though they've been breaking records lately.
Next week the market may also react to the first round of voting in the French presidential election.
Polls between the top four candidates are fairly close, and a good showing by far-right candidate Marine Le Pen or leftist Jean-Luc Melenchon, as opposed to their more centrist rivals, could unsettle investors. The top two candidates will advance to a final round of voting in early May.
Mattel, the largest toy company in the US, said its sales dropped 15 per cent in the fiscal first quarter as it continued to deal with effects of poor sales over the holiday season. The company's revenue totalled 735.6 million dollars, which was 67 million dollars less than expected, according to FactSet. The stock lost 3.42 dollars, or 13.6 per cent, to 21.79 dollars.
Mattel also took a steep loss after it reported its fourth-quarter results. Its stock is down 21 per cent this year.
Benchmark US crude shed 1.09 dollars, or 2.1 per cent, to 49.62 dollars a barrel in New York. Brent crude, used to price international oils, fell 1.03 dollars, or 1.9 per cent, to 51.96 dollars a barrel in London.
Schlumberger, the world's biggest oilfield services company, fell after it reported less revenue than analysts had forecast. The company said revenue in China, Russia and the North Sea fell more than it had expected. The stock gave up 1.67 dollars, or 2.2 per cent, to 74.84 dollars and competitors Halliburton and Baker Hughes both fell, too.
Honeywell's profit and sales were better than expected, and the industrial conglomerate raised its profit projection for the year.
The stock jumped 3.31 dollars, or 2.7 percent, to 127.08 dollars. Aviation electronics company Rockwell Collins raised its profit and sales forecasts after its 8.6 billion dollar purchase of former competitor B/E Aerospace. Its stock rose 5.11 dollars, or 5.1 per cent, to 104.70 dollars.
In other energy trading, wholesale gasoline lost 3 cents to 1.64 dollars a gallon and heating oil fell 3 cents to 1.55 dollars a gallon. Natural gas gave up 6 cents to 3.10 dollars per 1,000 cubic feet.
Gold rose 5.30 dollars to 1,289.10 dollars an ounce. Silver lost 16 cents to 17.86 dollars an ounce. Copper remained at 2.54 dollars a pound.
The dollar dipped to 109.21 yen from 109.31 yen. The euro fell to 1.0695 dollars from 1.0722 dollars.
France's CAC-40 retreated 0.4 per cent after a big gain on Thursday. Germany's DAX gained 0.2 per cent and the British FTSE 100 lost 0.1 per cent. The Nikkei 225 in Tokyo gained just over 1 per cent and the Kospi in South Korea added 0.7 per cent. Hong Kong's Hang Seng shed 0.1 per cent.