Stocks slip as drug company shares drag Wall Street lower
Major US stock indexes slipped on Friday as drug companies dragged the market lower.
Small-company stocks bucked the downward trend and continued to climb, and bond yields rose to their highest level in a year.
Drugmakers like Merck and biotech company Amgen took some of the biggest losses Friday. Weak results from Gap and Abercrombie & Fitch hurt retailers as investors kept a close eye on the upcoming holiday season.
Small companies including regional banks continued to make large gains. Those stocks have risen sharply since the presidential election last week and are now at record highs.
"Some of the proposals that (President-elect Donald) Trump has promoted, specifically deregulation and also some of his trade proposals, are better for small companies than potentially they are for large ones," said Katie Nixon, chief investment officer for Northern Trust.
The Dow Jones industrial average slid 35.89 points, or 0.2%, to 18,867.93. The Standard & Poor's 500 index lost 5.22 points, or 0.2%, to 2,181.90. The Nasdaq composite touched a record high early on, but turned lower and gave up 12.46 points, or 0.2%, to 5,321.51.
That is not a big loss, but the major indexes hadn't fallen that much since before the presidential election. Still, the S&P 500 and Nasdaq finished substantially higher this week after their big gains the week before. But indexes of smaller companies, like the Russell 2000 and the S&P 600, did better. They are on 11-day winning streaks and have hit all-time highs.
Among small-company stocks, mortgage lending service company LendingTree added 6.80 dollars, or 7.3%, to 100 dollars and coal miner Cloud Peak Energy rose 79 cents, or 15.8%, to 5.79 dollars.
Losses for drug companies weighed down health care stocks. Botox maker Allergan retreated 8.20 dollars, or 4.1%, to 191.78 dollars and biotech giant Amgen fell 2.13 dollars, or 1.4%, to 145.23 dollars. Hepatitis C drugmaker Gilead Sciences shed 96 cents, or 1.3%, to 74.62 dollars.
Drug company stocks are coming off their biggest weekly gain in two years. The stocks had been falling in the months leading up to the election because investors worried that under a Hillary Clinton presidency, the federal government would take steps to rein in drug prices. Those kinds of steps are less likely under a Trump presidency and a Republican-controlled Congress.
The dollar continued to climb. It is near one-year highs against the euro and six-month highs against the yen. The dollar rose to 110.63 yen from 109.89 yen. The euro fell to 1.0599 from 1.0626 dollars.
The dollar has not been this strong since early 2003. Ms Nixon of Northern Trust said that is affecting big multi-national companies because it can hurt their sales outside the US, but it is less of a problem for smaller, domestically-oriented companies.
Investors continued to sell US government bonds at a rapid clip, and bond prices wobbled and turned lower. The yield on the 10-year Treasury note rose to 2.34% from 2.30%. Bond prices have fallen hard since the election and yields are now at their highest in a year.
Teen clothing company Abercrombie & Fitch plunged 2.33 dollars, or 13.8%, to 14.60 dollars after it reported weak sales and a smaller profit than analysts had expected. Gap's said fewer people visited its stores heading into the holiday season. Its stock gave up 5.10 dollars, or 16.6%, to 25.61 dollars. Sporting goods Hibbett Sports retailer cut its annual forecasts after a weak third-quarter report. It dropped 4.90 dollars, or 10.8%, to 40.40 dollars.
Shoppers are not buying as many clothes and moving toward discount chains. That trend continued as discount retailer Ross Stores rose 2.47 dollars, or 3.8%, to 68 dollars after it posted a better-than-expected profit and sales.
Companies that sell common household products are also moving lower. Procter & Gamble gave up 1.07 dollars, or 1.3%, to 82 dollars and drugstore operator Walgreens Boots Alliance slumped 72 cents to 83.27 dollars. Those companies have fallen since the election as investors buy companies that could benefit more from faster economic growth.
Benchmark US crude rose 27 cents to close at 45.69 dollars a barrel in New York, while Brent crude, which is used to price international oils, added 37 cents to 46.86 dollars a barrel in London. Energy companies traded higher. Chevron rose 1.08 dollars, or 1%, to 109.20 dollars and ConocoPhillips jumped 1.15 dollars, or 2.6%, to 44.76 dollars.
Gold fell 8.20 to 1,208.70 dollars an ounce. Silver lost 15 cents to 16.62 dollars an ounce. Copper dipped two cents to 2.47 dollars a pound.
In other energy trading, wholesale petrol stayed at 1.34 dollars a gallon. Heating oil picked up one cent to 1.46 dollars a gallon. Natural gas climbed 14 cents, or 5.2%, to 2.84 dollars per 1,000 cubic feet.
France's Cac 40 fell 0.5% and the FTSE 100 in Britain dipped 0.3%. The German Dax lost 0.2%. Japan's benchmark Nikkei 225 index added 0.6% as the yen hit a six-month low, helping shares of the country's big exporters. South Korea's Kospi shed 0.3% and Hong Kong's Hang Seng rose 0.4%.