Stock Rally Stalls Amid Mixed Earnings, BOE Decision

By Justin Yang and Riva Gold Features Dow Jones Newswires

Dow industrials stall near record high

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-- Pound drops after Bank of England leaves rates unchanged

-- European earnings mixed

The stock rally that pushed the Dow Jones Industrial Average above 22000 for the first time stalled Thursday.

The blue-chip index slipped 23 points, or 0.1%, to 21993 in recent trading. The S&P 500 and Nasdaq Composite both declined 0.2%.

Some of the biggest insurance companies dragged the broader financial sector lower after reporting earnings results. Prudential Financial shares fell 2.8% in recent trading as its operating income missed analyst expectations. MetLife shares were recently down 1.7%.

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In other corporate news, shares of Tesla Inc. jumped around 6% after the electric-car company reiterated its plans to sell more vehicles during the second half of the year.

The pause in U.S. stocks comes a day after the Dow topped 22000 for the first time, its 32nd record of the year, as stocks benefited from a buoyant global economy, a weaker dollar and a solid earnings season.

In Europe, the British pound came under pressure after the Bank of England kept interest rates unchanged, despite signaling that the long era of easy money is gradually drawing to a close.

The British pound fell 0.7% to $1.3133. The pound started falling in European afternoon trading when investors saw that only two BOE officials had dissented in favor of a rate increase, said Thu Lan Nguyen, analyst at Commerzbank AG. "Some anticipated there would be three dissenting," she said.

The central bank also lowered its 2017 U.K. economic growth forecast to 1.7% from 1.9% in May. The 2018 forecast was reduced to 1.6% from 1.7%.

"GDP growth remains sluggish in the near term, as the squeeze on the households' real incomes continues to weigh on consumption," BOE Gov. Mark Carney said in a press conference after the rate announcement, even as he said he anticipated raising interest rates faster than investors currently expect.

Declines in the pound helped push the export-heavy FTSE 100 index up 0.8%, led by exporters such as Shire PLC, British American Tobacco PLC and AstraZeneca PLC.

European stocks have struggled in recent sessions amid a climbing euro and mixed corporate results. German conglomerate Siemens AG fell 2.8% Thursday after its second results were slightly weaker than analysts had expected. Italy's UniCredit SpA was one of the biggest gainers, up 6% after it reported a higher second-quarter profit.

In Asia, South Korean stocks led the way lower, with the Kospi down 1.7% after recently topping highs set in 2011. A big pressure point was Samsung Electronics, which fell 2.5% -- erasing its gains for the week -- as the Samsung conglomerate's de facto head testified for the first time at his corruption trial.

Some analysts said the prospect of higher corporate and personal income taxes under the country's new leadership has also put pressure on the index. South Korea's government is planning to raise taxes on wealthy individuals and large companies, the first increase in the country's corporate-tax rate since 1991.

Meanwhile, a decline in technology shares weighed down Asian bourses after they climbed Wednesday following Apple's strong quarterly report.

Japan's Nikkei and Hong Kong's Hang Seng fell around 0.3%, while Taiwan's Taiex declined 0.5% after hitting 27-year highs a day earlier.

Corrie Driebusch contributed to this article.

Write to Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

August 03, 2017 10:24 ET (14:24 GMT)