The News Herald (Willoughby, OH)
Losses for banks, companies drop stocks
U.S. stocks slipped Tuesday as smaller companies and banks took their worst losses in a few months.
NEW YORK » U.S. stocks slipped Tuesday as smaller companies and banks took their worst losses in a few months. With stock indexes near record highs, investors moved some money into big dividend stocks like real estate companies.
Banks and other financial companies have been climbing over the last two months, but Tuesday they skidded as interest rates moved lower. Small, domestically-focused companies had their worst day since mid-August as House Republicans began making changes to their tax bill. Their Senate counterparts are expected to introduce their own bill soon. Smaller companies tend to pay higher tax rates than their bigger peers because they make more of their money in the U.S. and don’t have as many ways to reduce their taxes.
“Financials would be a primary
beneficiary of a 20 percent corporate tax rate because they’re domestically based and they pay domestic taxes,” said Quincy Krosby, chief market strategist at Prudential Financial.
While the pace of company earnings is slowing, they continued to hold sway over parts of the market. Travel booking companies Trip Advisor and Priceline both plunged while Weight Watchers continued to surge after it raised its forecasts for the year. The weight loss company has more than quadrupled in value this year.
The Standard & Poor’s 500 index dipped 0.49 points to 2,590.64. The Dow Jones industrial average added 8.81 points to 23,557.23, another record high. The Nasdaq composite fell 18.65 points, or 0.3 percent, to 6,767.78. The Russell 2000 index tumbled 18.87 points, or 1.3 percent, to 1,479.09.
Banks fell along with bond yields and interest rates. Both have moved lower over the last few days, which reduces the profits banks make from lending. The yield on the 10-year Treasury note slipped to 2.31 percent from 2.32 percent.
JP Morgan Chase fell $2.03, or 2 percent, to $98.75 and U.S. Bancorp lost $1.40, or 2.6 percent, to $53.45. First Financial Bancshares, a smaller, Texas-based bank, fell $1.15, or 2.5 percent, to $44.40.
Red Robin Gourmet Burgers plunged after it slashed its profit forecast. It pointed to higher labor costs and said it will temporarily stop opening new locations at the end of its next fiscal year. The stock lost $19.35, or 28.9 percent, to $47.70. Consumer products distributor Core-Mark fell $3.07, or 9.1 percent, to $30.63 after it cut its outlook.
Household goods makers, utilities, and other companies that pay big dividends did better than the rest of the market. Drugstore and pharmacy benefits company CVS Health jumped $2.15, or 3.2 percent, to $68.95 to recover some of its recent losses. Shopping mall operator GGP soared $3.19, or 16.8 percent, to $22.20. Bloomberg reported that GGP is in talks with Brookfield Asset Management about potentially buying the rest of the company. Competitor Macerich jumped $4.57, or 8.4 percent, to $58.76.