GE, energy shares drag Wall Street lower, bond proxies rise

Traders work on the floor of the New York Stock Exchange (NYSE) November 8, 2017. — Reuters pic
Traders work on the floor of the New York Stock Exchange (NYSE) November 8, 2017. — Reuters pic

NEW YORK, Nov 15 — US stock indexes fell yesterday as General Electric shares plunged for a second straight day and a drop in crude oil prices hit energy stocks.

GE fell 5.9 per cent to US$17.90 (RM74.97) in the largest daily volume in two years as investors wondered if a massive overhaul of the company by new Chief Executive John Flannery will be enough to revive the industrial conglomerate.

The stock touched US$17.46, its lowest in nearly six years.

Energy was the largest decliner among the 11 S&P 500 sectors as oil prices fell the most in a month. The International Energy Agency forecast rising US crude output and had a gloomy outlook for global demand growth.

Exxon fell 0.8 per cent and ConocoPhillips was down 2.5 per cent, while the S&P 500 energy sector fell 1.5 per cent, the most in more than four months.

The Dow Jones Industrial Average fell 30.23 points, or 0.13 per cent, to end at 23,409.47, the S&P 500 lost 5.97 points, or 0.23 per cent, to 2,578.87 and the Nasdaq Composite dropped 19.72 points, or 0.29 per cent, to 6,737.87.

Stocks favoured by investors seeking yield, the so-called bond proxies, were the best performers as the yield curve, or the gap between short- and long-term US government bond yields, remained near its flattest in a decade.

Utilities and consumer staples, sectors that pay relatively high dividends, were the best performers on the day. Utilities rose 1.2 per cent for a 2.4 per cent gain since Friday's close, the largest two-day percentage gain since late February.

“People are looking for yield across the globe so potentially there's foreign flows going into bond proxies,” said Paul Zemsky, chief investment officer, Multi-Asset Strategies and Solutions at Voya Investment Management in New York.

He said the outperformance of stocks in the utilities and consumer staples sectors could also be due to investors getting more defensive “after growth sectors and the overall market have been doing so well this year.”

The S&P 500 fell for the third session in the last four, but it remains within 1 per cent of a record closing high hit last week.

TV streaming device maker Roku snapped a three-day winning streak after hitting a record high of US$48.80, ending down 13.5 per cent at US$36.95.

Advance Auto Parts soared 16.3 per cent to US$95.72 after it affirmed its full-year profit forecast and beat quarterly profit estimates.

Declining issues outnumbered advancing ones on the NYSE by a 1.47-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favoured decliners.

The S&P 500 posted 45 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 64 new highs and 87 new lows.

About 6.73 billion shares changed hands in US exchanges, roughly in line with the daily average over the last 20 sessions. — Reuters

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