Stocks slip, bond yields surge
NEW YORK (AP) — U.S. stocks slipped for the third consecutive day Thursday as media and defense companies skidded. Bond yields climbed to their highest levels since May, which helped banks and hurt stocks that pay big dividends.
Stocks started the day higher and were flat at midday, then gradually slid through the afternoon. Cable and TV companies and publishers sank, and industrial companies like Raytheon and L-3 Communications fell after reporting weak results.
Bond prices fell and yields climbed. That helped banks, since they’ll earn more from lending as interest rates rise. It also sent high-dividend stocks like utilities and real estate companies lower as bonds become more appealing to investors seeking income.
Scott Kimball, co-portfolio manager of the BMO TCH Core Plus Bond Fund, said investors believe that central banks will cut back on bond buying. In recent days that’s sent prices lower and yields higher.
“The largest bond buyers, the biggest bond managers in the market, have been these central banks,” he said. Kimball added that yields could rise further if economic growth picks up.
The Dow Jones industrial average fell 29.65 points, or 0.2 percent, to 18,169.68. The Standard & Poor’s 500 index sank 6.39 points, or 0.3 percent, to 2,133.04. The Nasdaq composite lost 34.29 points, or 0.7 percent, to 5,215.97.
Comcast continued to fall as investors worried about competition it could face from a new online TV service like AT&T’s DirectTV Now, which was announced Tuesday. Comcast lost $1.08, or 1.7 percent, to $61.48 after falling 3 percent Wednesday.
Competitor Charter Communications and TV networks like CBS and Twenty-First Century Fox also skidded. Automaker and auto parts retailers also fell, which contributed to the losses for consumer companies.
Raytheon gave up $5, or 3.5 percent, to $136.28 as its outlook failed to impress investors. Communications and surveillance company L-3 Communications gave up $10.96, or 7.4 percent, to $137.75 after it posted weak sales. Aerospace giant Boeing slipped after a big surge Wednesday.
U.S. government bond prices dropped. The yield on the 10-year Treasury note jumped to 1.85 percent from 1.79 percent a day earlier, its highest yield in almost five months.
Bristol-Myers Squibb broke out of a slump after it raised its annual forecasts. The stock has fallen by about one-third since early August as investors worried about sales of its cancer treatment Opdivo. The stock rose $2.67, or 5.4 percent, to $51.96. Celgene also raised its forecasts as sales of its cancer drug maker Revlimid kept rising. The stock added $6.34, or 6.4 percent, to $104.75.
Smartphone chipmaker Qualcomm said it will buy NXP for $38 billion, or $110 per share in cash. Qualcomm jumped $1.89, or 2.8 percent, to $70.09 and NXP rose 42 cents to $99.09. The deal has been rumored for about a month and investors were excited about the prospect. Qualcomm has climbed 10 percent and NXP is up 20 percent since it was first reported that the companies were in talks.
Phone companies Level 3 Communications and CenturyLink surged after the Wall Street Journal said the two companies are in talks to combine. CenturyLink soared $2.75, or 9.7 percent, to $31 and Level 3 climbed $4.95, or 10.5 percent, to $51.87. AT&T, Verizon and Frontier Communications also rose.
Newspaper publishers Gannett and Tronc, the company formerly known as Tribune Publishing, both slumped on reports they may not be able to combine. Bloomberg reported Thursday that banks financing the deal were not willing to help fund it. The report cited anonymous sources and said the companies were still talking. USA Today publisher Gannett dropped $1.69, or 17.1 percent, to $8.21 and Tronc fell $4.73, or 27.8 percent, to $8.21 in heavy trading.
Earnings continued to pour in after the closing bell. Amazon fell 4 percent in aftermarket trading after its profit fell short of analysts’ estimates, and Alphabet, the corporate parent of Google, rose 1 percent after it surpassed expectations.
Oil prices recovered after falling for three days in a row. U.S. benchmark crude rose 54 cents, or 1.1 percent, to $49.72 a barrel in New York. Brent crude, the international standard, added 49 cents, or 1 percent, to $50.47 a barrel in London.
ZTO Express, an express delivery company in China, went public in the largest IPO of the year so far. The company’s offering of 72.1 million U.S. shares raised $1.4 billion. The offering priced at $19.50, and shares lost $2.93, or 15 percent, to $16.57.