S&P 500 falls for fifth day as financials drag

S&P 500 falls for fifth day as financials drag

NEW YORK,. Wall Street stocks fell yesterday, with the S&P 500 notching a fifth straight day of losses as financial stocks were hit by fears that regulations on the banking industry would tighten once the Democratic Party takes control of the US House of Representatives.

Financial stocks fell after Democrat Maxine Waters, who is expected to become chair of the House Financial Services Committee, made clear that she intends to push for stricter rules on the sector. Waters said she was concerned by the Federal Reserve’s efforts to reduce capital and liquidity requirements for banks and wants the central bank to vigorously supervise large banks.

The financial sector dropped 1.4 per cent and was the biggest percentage decliner on the S&P 500. The S&P 500 Banks index fell 1.7 per cent.

US stocks pared losses somewhat after British Prime Minister Theresa May won the backing of her senior ministers on a draft agreement for exiting the European Union, though they resumed their descent in the last half-hour of trading.

“Clarity on Brexit immediately lent a bid to the broader market,” said Ryan Larson, head of US equity trading at RBC Global Asset Management in Chicago. “Financials are still lagging, but the broader market has recovered quite some from earlier lows.”

Technology stocks also extended recent losses as shares of Apple Inc fell for a fifth consecutive day on mounting concerns that iPhone sales have hit a wall. At their session low, Apple shares were down more than 20 percent from their record high.

Apple’s 2.8 per cent drop helped drag the S&P 500 technology index down 1.3 per cent.

The market had started on a buoyant note as oil prices rebounded and data showed consumer prices rose only as much as expected last month, easing fears of overheating inflation and a faster pace of interest rate hikes.

But sentiment turned lower by midday, with investors citing ongoing concerns about a slowdown in global economic growth prospects as reason to remain cautious.

“A cocktail of uncertainty regarding global growth, as well as trade-related issues, has put market speculators on their heels,” said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

The Dow Jones Industrial Average fell 205.99 points, or 0.81 per cent, to 25,080.5, the S&P 500 lost 20.6 points, or 0.76 per cent, to 2,701.58 and the Nasdaq Composite dropped 64.48 points, or 0.9 per cent, to 7,136.39.

PG&E Corp slumped 21.8 per cent after the utility warned it could face “significant liability” in excess of its insurance coverage if its equipment was found to have caused the blaze raging in Northern California.

Declining issues outnumbered advancing ones on the NYSE by a 1.54-to-1 ratio; on Nasdaq, a 1.93-to-1 ratio favoured decliners.

The S&P 500 posted 12 new 52-week highs and 17 new lows; the Nasdaq Composite recorded 18 new highs and 206 new lows.

Volume on US exchanges was 8.96 billion shares, compared with the 8.53 billion average over the last 20 trading days. — Reuters