Stocks Finish Wednesday Mostly Higher 06/20 16:24
U.S. stocks rose Wednesday as investors bet that technology companies and
small, domestically-focused firms will continue to do well even if the trade
dispute between the U.S. and China gets worse.
NEW YORK (AP) --- U.S. stocks rose Wednesday as investors bet that
technology companies and small, domestically-focused firms will continue to do
well even if the trade dispute between the U.S. and China gets worse. Media
companies jumped after Disney reached a new deal with Twenty-First Century Fox.
Facebook, Microsoft and Alphabet led the rally in technology companies as
the Nasdaq composite topped the all-time high it set last week. Disney
sweetened its deal to buy Fox's entertainment businesses to $71.3 billion,
topping an offer from Comcast earlier this month. Other media companies like
Netflix and Viacom climbed as investors hoped more deals will follow.
Starbucks plunged to its lowest price in a year and a half after the company
said its U.S. and China businesses both ran into trouble during the current
quarter. That led to losses in other restaurant companies such as McDonald's,
which contributed to a small decline in the Dow Jones industrial average, its
seventh straight down day.
General Electric dipped following the announcement that GE will be removed
from the Dow next week, ending a 110-year stint. Shares of Walgreens, its
Smaller and more U.S.-oriented companies such as retailers climbed. While
technology companies are the biggest sector of the S&P 500 and make most of
their sales overseas, just the opposite of small caps, investors feel that both
types of stocks are less vulnerable to tariffs than industrial companies or
household goods makers, among other sectors.
Sameer Samana, global equity and technical strategist for the Wells Fargo
Investment Institute, said investors aren't sure what to make of the
administration's mix of harsh pronouncements and conciliatory statements. While
the market has taken some sharp drops during the trade dispute, he said Wall
Street usually comes back to the fact that the global economy, and especially
the U.S. economy, is doing well.
"For the most point things are pretty good from an economic and fundamental
standpoint," he said. Samana added that technology companies have often led the
way when the market recovers from trade-related slumps because of their strong
earnings, and because China's government can't put tariffs on too many U.S.
technology companies because it is trying to build up its own technology sector.
The S&P 500 index rose 4.73 points, or 0.2 percent, to 2,767.32. The Nasdaq
composite gained 55.93 points, or 0.7 percent, to 7,781.51. The Russell 2000
index of smaller-company stocks added 13.54 points, or 0.8 percent, to
1,706.99, also closing at a record high.
But the Dow industrials slipped 42.41 points, or 0.2 percent, to 24,657.80.
The Dow has fallen for seven days in a row, its worst streak in more than a
year, although the losses have been fairly small.
Markets have been on edge with the U.S. and China announcing tariffs on each
other's imports and threatening more. While global stocks fell Tuesday, the S&P
500 finished with a loss of just 0.4 percent as investors decided that many
U.S. industries don't face a major threat from the proposals and that
negotiations might take some of the sting out of the proposed taxes.
Twenty-First Century Fox jumped again after it accepted Disney's latest
offer. It said yes to a $52.4 billion bid from Disney in December before
Comcast offered $65 billion in cash, and some experts think Comcast will raise
its offer again. Fox surged 7.5 percent to $48.08 while Disney added 1 percent
to $107.15 and Comcast climbed 1.8 percent to $33.39.
Starbucks sank 9.1 percent to $52.22 after a weak sales forecast. Starbucks
said it didn't do as many transactions in China as it expected, and the
controversy that followed the arrest of two black men at a Philadelphia store
temporarily slowed its U.S. business. Other restaurant chains also struggled,
and Dow component McDonald's lost 1.5 percent to $162.56.
General Electric was part of the Dow when it was created in 1896, and it's
been a one of the 30 stocks on the index continuously since 1907. But GE has
been selling businesses for a decade, reducing its value, and it's by far the
least expensive Dow stock. The Securities and Exchange Commission is
investigating the company over a $15 billion hit taken to cover miscalculations
made within an insurance unit. Adjusted for inflation, GE was worth around $860
billion in mid-2000, but it's worth about $112 billion now.
GE slipped 0.5 percent to $12.88. Walgreens, which replaces GE in the Dow on
Tuesday, jumped 5.2 percent to $68.
U.S. crude rose 1.8 percent to $66.22 and Brent crude, the international
standard for oil prices, lost 0.5 percent to $74.74 a barrel in London.
Wholesale gasoline lost 0.7 percent to $2.02 a gallon. Heating oil fell 0.7
percent to $2.11 a gallon. Natural gas jumped 2.2 percent to $2.96 per 1,000
Bond prices inched lower. The yield on the 10-year Treasury note rose to
2.93 percent from 2.90 percent.
Gold fell 0.3 percent to $1,274.50 an ounce. Silver lost 0.1 percent to
$16.31 an ounce. Copper dipped 0.2 percent to $3.04 a pound.
The dollar edged up to 110.22 yen from 110.07 yen. The euro rose to $1.1588
The FTSE 100 in Britain added 0.3 percent and Germany's DAX rose 0.1
percent. France's CAC 40 lost 0.3 percent. After sharp losses the day before,
Japan's benchmark Nikkei 225 index rebounded 1.2 percent and South Korea's
Kospi gained 1 percent. Hong Kong's Hang Seng rose 0.8 percent.