Financials sell off as insurers are hit in wake of hurricanes Harvey, Irma
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U.S. stocks switched between small gains and losses Thursday, as investors tracked Hurricane Irma and focused on European Central Bank President Mario Draghi's comments about the future of monetary stimulus in the eurozone.
The ECB left key interest rates unchanged, while Draghi indicated that the decision on how to taper the quantitative-easing program will come in October (http://blogs.marketwatch.com/thetell/2017/09/07/ecb-live-blog-is-a-strong-euro-making-mario-draghi-miserable/).
The S&P 500 was last down 2 points, or less than 1% at 2,463, with seven of the 11 main sectors in negative territory. Financials were leading the losses, down 2%, while so-called defensive sectors such as utilities and health-care were higher, up 0.7% and 1%, respectively.
Banking stocks fell sharply following a drop in the 10-year Treasury note yield (http://www.marketwatch.com/story/treasury-yields-slip-ahead-of-ecb-news-conference-2017-09-07), which declined 6 basis points to 2.04%. Lower bond yields to which borrowing and lending rates are tied means that banks profit less from the spread between short-term and long-term lending.
The Financials Select Sector SPDR Fund (XLF) was down 2%, while PowerShares KBW Regional Banking Portfolio ETF (KBWR) was down 2.5%.
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The Dow Jones Industrial Average was 41 points, or 0.2%, lower at 21,766 The Nasdaq Composite gained 9 points, or 0.2%, to 6,402.
Some analysts suggested that the combination of a number of devastating hurricanes hitting the U.S. and potential escalation of nuclear threat in North Korea is keeping investors somewhat cautious.
"Investors don't want to go into the weekend when North Korea is scheduled to show its military prowess during the Founders day celebration without their hedges in place," said Quincy Krosby, chief market strategist at Prudential Financial.
Other analysts noted stocks have remained largely resilient in the face of escalating geopolitical tensions, hurricane damage and other concerns.
See:Why investors are so chill about North Korea, hurricanes, and everything else (http://www.marketwatch.com/story/why-investors-are-so-chill-about-north-korea-hurricanes-and-everything-else-2017-09-06)
The major U.S. benchmarks closed higher on Wednesday (http://www.marketwatch.com/story/us-stock-futures-kept-in-check-by-worries-over-north-korea-hurricane-irma-2017-09-06) after congressional leaders and President Donald Trump agreed to extend the debt-limit deadline and fund the government through mid-December.
The agreement raised hopes for more bipartisan deals that would allow the Trump administration to move forward with its promised economic reforms. However, it also raised concerns that divisiveness in the Republican party may limit further policy success, because other GOP leaders weren't in favor of a short-term agreement.
First Take:Trump's deal with 'Chuck and Nancy' may improve chances for his legislative agenda (http://www.marketwatch.com/story/debt-ceiling-deal-may-slightly-improve-chances-for-trump-agenda-2017-09-06)
Investors turned their attention to Category 5 Hurricane Irma that wrecked (http://www.marketwatch.com/story/death-toll-rises-to-8-as-hurricane-irma-barrels-through-caribbean-heads-for-florida-2017-09-07) a string of Caribbean Islands as it barreled toward the Florida coast. The weather system--the worst ever recorded in the Atlantic--is expected to hit the Miami area and the Florida Keys on Sunday, sparking a mandatory evacuation of the southern, coastal parts of the state.
Several people have died in Barbuda, St. Martin and Anguilla, according to media reports.
Irma comes just two weeks after Hurricane Harvey hit the Texas and Louisiana Gulf Coast, where damages are estimated by AccuWeather to be up to $190 billion (http://www.marketwatch.com/story/hurricane-harvey-could-cost-190-billion-be-worst-ever-us-natural-disaster-says-accuweather-2017-08-31).
Read:JetBlue and Delta offer special pricing to people fleeing Hurricane Irma (http://www.marketwatch.com/story/jetblue-and-delta-offer-special-pricing-to-people-fleeing-hurricane-irma-2017-09-06)
ECB in focus: The ECB left key interest rates unchanged and expects them to remain at present levels for "extended period". In the accompanying statement, which was virtually identical to the previous one, the central bank said that asset buying will continue at a EUR60 billion ($71 billion) a month through year-end or beyond and quantitative easing could be ramped up if the outlook deteriorates.
The euro strengthened against rivals after Draghi answered questions during the news conference, hitting $1.20 in New York trade. That helped push the ICE Dollar Index down 0.8% to 91.566.
Read: 4 takeaways from ECB President Mario Draghi's news conference (http://www.marketwatch.com/story/4-takeaways-from-ecb-president-mario-draghis-news-conference-2017-09-07)
European stocks (http://www.marketwatch.com/story/european-stocks-hold-steady-in-runup-to-ecb-update-2017-09-07) trimmed earlier gains but were still slightly higher.
Economic news:Initial jobless claims (http://www.marketwatch.com/story/storm-surge-hurricane-harvey-boosts-jobless-claims-by-62000-to-298000-2017-09-07)in the period running from Aug. 27 to Sept. 2 surged by 62,000 to 298,000, reaching the highest level since spring 2015, largely due to Hurricane Harvey that left many in Texas unable to work.
Among Federal Reserve speakers, Cleveland Fed President Loretta Mester is scheduled to address the economic outlook and monetary policy at the Economic Club of Pittsburgh, at 12:15 p.m. Eastern.
New York Fed President William Dudley will speak at New York University at 7 p.m. Eastern. Later, Kansas City Fed President Esther George will discuss the U.S. economic outlook at the Omaha Economic Forum in Omaha, Neb., at 8:15 p.m. Eastern.
On Wednesday, Fed Vice Chairman Stanley Fischer said Wednesday that he would resign from the central bank next month.
Read:Fed's departing Fischer remembered as 'stalwart' amid central bank turmoil (http://www.marketwatch.com/story/teacher-to-bernanke-and-draghi-fischer-remembered-as-giant-in-field-2017-09-06)
Stock movers: Shares of GoPro Inc.(GPRO) rallied 19% after the wearable camera maker said it expects to be profitable on an adjusted basis in the third quarter.
Shares of RH(RH) soared 45% after the upscale retailer formerly known as Restoration Hardware reported earnings that topped Wall Street estimates (http://www.marketwatch.com/story/rh-shares-soar-30-on-earnings-beat-raised-guidance-2017-09-06) late Wednesday.
Amazon.com Inc.(AMZN) shares rose 0.7FB% after the online retailer said it plans to open a second headquarters somewhere in North America (http://www.marketwatch.com/story/amazon-begins-city-search-for-second-n-american-headquarters-plans-to-invest-over-5-billion-2017-09-07) that will house up to 50,000 employees and cost $5 billion to build and operate.
Facebook Inc.(FB) shares dipped 0.9% after the company late Wednesday said it traced ad sales totaling $100,000 from Russian accounts (http://www.marketwatch.com/story/facebook-links-thousands-of-political-ads-to-russian-troll-farm-2017-09-06), some of which are likely linked to a troll farm in St. Petersburg called the internet Research Agency.
Mastercard Inc.(MA) shares jumped 3.3% to trade at a record (http://www.marketwatch.com/story/mastercards-stock-heads-for-record-open-after-revenue-outlook-raised-2017-09-07)after the company raised its revenue outlook. Rival Visa Inc. (V) shares also rose, up 1.6%.
Barnes & Noble Inc.(BKS) shares sank 14% after the bookseller reported fiscal first-quarter earnings and sales that missed consensus.
Other markets:Asian markets closed mixed (http://www.marketwatch.com/story/south-korea-leads-gains-in-asia-as-markets-rebound-2017-09-06), with South Korean and stocks ending higher, but Chinese and Hong Kong lower.
Crude-oil was slightly lower, while gold prices rose 1% to $1,351.70 a troy ounce.
(END) Dow Jones Newswires
September 07, 2017 12:16 ET (16:16 GMT)