Financials fall as insurers take hit from hurricanes
U.S. stock indexes ended slightly lower Thursday as investors sold financials, consumer-discretionary and telecommunication shares, with Disney and Goldman Sachs exacting a hefty toll on the Dow industrials.
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Investors were tracking Hurricane Irma and registering the latest policy stance from European Central Bank President Mario Draghi's. The ECB left key interest rates unchanged, while Draghi indicated that the decision on how to taper a 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 finished the session down 0.44 point, or less than 0.1%, at 2,465.10, led by a 2.1% decline in telecommunications, a 1.7% loss in financials, and a 0.9% slide in the consumer-discretionary sector.
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 nearly 5 basis points to 2.061%. Lower bond yields can undercut banks' business models of borrowing short-term and lending long.
The Financials Select Sector SPDR Fund (XLF) closed down 1.7%, ending below a long-term trend line for the first time in 14 months (http://www.marketwatch.com/story/popular-financial-etf-in-jeopardy-of-breaching-200-day-moving-average-for-first-time-in-14-months-2017-09-07), while PowerShares KBW Regional Banking Portfolio ETF (KBWR) closed down 2.6%.
The Dow Jones Industrial Average , meanwhile, lost 22.86 points, or 0.1%, to close at 21,784.78. Walt Disney Co. (DIS) fell 4.4% after the entertainment giant's CEO Bob Iger lowered Wall Street's full-year guidance for earnings. Shares of Goldman Sachs Group Inc. (GS) also weighed on the average, down 1.4%.
The tech-heavy Nasdaq Composite Index , meanwhile, eked out a slight gain, up 4.55 points, or 0.1%, at 6,397.37.
Some analysts suggested that the combination of devastating hurricanes pummeling the U.S. and the Caribbean and the potential escalation of nuclear threats in North Korea is keeping investors cautious. Category 5 Hurricane Irma has 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 barrels toward the Florida coast.
"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.
That said, stocks have remained largely resilient in the face of escalating geopolitical tensions, storm damage, lofty valuations, and central-bank moves.
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)
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)
Hurricane 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).
The insurance sector slumped, with the iShares U.S. Insurance ETF(IAK) and the PowerShares KBW Property & Casualty Insurance Portfolio(KBWP) closing sharply lower on the back of the storm concerns. The iShares ETF was off 2.1%, while the PowerShares ETF was down about 3%. Both are at least 4% lower so far in September.
Against that backdrop, the Senate on Thursday advanced a deal struck between President Donald Trump and Democratic leaders on Wednesday that rolled together emergency relief for victims of Hurricane Harvey with a short-term extension of the government's funding and its borrowing limit.
In a 80-17 vote ended debate (http://www.marketwatch.com/story/senate-passes-hurricane-aid-plus-debt-limit-government-funding-extension-2017-09-07-14914711)on legislation approving $15.25 billion for relief and recovery efforts for the Harvey and Irma hurricanes, as well as provisions keeping the government running and its debt limit suspended until Dec. 8.
Earlier in the day, Trump and Senate Minority Leader Chuck Schumer reportedly agreed to pursue a deal that would remove the need for Congress to repeatedly raise the U.S. debt ceiling (http://www.marketwatch.com/story/trump-schumer-agree-on-planning-to-repeal-debt-ceiling-report-2017-09-07).
The political machinations may leave investors wondering about the prospect of key legislative policies becoming a reality, including tax reform, which some have credited with lifting equities.
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: In central-bank news, The ECB left key interest rates unchanged.
Check out: A recap of the ECB's news conference (http://blogs.marketwatch.com/thetell/2017/09/07/ecb-live-blog-is-a-strong-euro-making-mario-draghi-miserable/)
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, but it pared its steepest loss to end down 0.1% at 91.552. That still puts the dollar gauge around its lowest level since January 2015.
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, speaking at the Economic Club of Pittsburgh, said she backs a gradual increase of interest rates.
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 12.4% 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.
Separately, Apple Inc. (AAPL), saw its shares trading lower after The Wall Street Journal reported that it was facing production delays (http://www.marketwatch.com/story/iphone-8-production-glitches-could-mean-delays-when-orders-start-wsj-2017-09-07-12914245) in the making of its new iPhone 8. Its shares closed down 0.4%.
Another Dow component, General Electric Co. (GE) tumbled to a 2-year low after analysts at J.P. Morgan Chase & Co. said the outlook for the industrial conglomerate was worse than his previous estimates (http://www.marketwatch.com/story/ges-stock-tumbles-to-2-year-low-after-jp-morgan-gets-more-bearish-2017-09-07). Shares were off 3.6%.
Amazon.com Inc.(AMZN) shares rose 0.7% 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 0.2% 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 2.7% 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 1.3%.
Barnes & Noble Inc.(BKS) shares sank 9.6% after the bookseller reported fiscal first-quarter earnings and sales that missed consensus.
Media stocks took a hit along with Disney (http://www.marketwatch.com/story/media-sector-suffers-selloff-after-disney-comcast-give-guidance-scaring-investors-2017-09-07). Comcast Corp. (CMCSA) led the sector down, falling 6.2%, while shares of Altice USA Inc. (ATUS) down 3.4%. Shares of Viacom Inc. (VIA) and 21st Century Fox Inc.(FOX) declined by at least 2%.
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.
U.S. trade crude-oil settled slightly lower (http://www.marketwatch.com/story/oil-gains-ahead-of-expected-drop-in-gasoline-stockpiles-2017-09-07) at $49.09 a barrel, while gold prices rose 0.8% to close at $1,350.30 an ounce, marking its highest level since Sept. 6, 2016 (http://www.marketwatch.com/story/gold-snaps-back-with-modest-gain-as-dollar-softens-anew-2017-09-07).
--Sara Sjolin contributed to this article
(END) Dow Jones Newswires
September 07, 2017 16:50 ET (20:50 GMT)