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US stocks languish on weak earnings; Chipotle, Yahoo down Stocks stage a late-day turnaround, helped by weaker dollar
(about 1 hour later)
NEW YORK — The stock market is heading for its second loss in a row Wednesday, led by banks and retailers, which would stand to lose the most if the economy slows down. NEW YORK — U.S. stocks are staging a rapid comeback in late-afternoon trading Wednesday, helped by a surge in the price of oil and a decline in the U.S. dollar. Chipotle Mexican Grill fell sharply as the company disclosed a federal investigation into its E. coli outbreak, and Yahoo sank as the troubled Internet company announced layoffs and plans to sell businesses.
Chipotle Mexican Grill fell sharply as the company disclosed a federal investigation into its E. coli outbreak, and Yahoo sank as the troubled Internet company announced layoffs and plans to sell businesses. KEEPING SCORE: The Dow Jones industrial average rose 177 points, or 1.1 percent, to 16,327 as of 3:30 p.m. Eastern. The Standard & Poor’s 500 index rose eight points, or 0.4 percent, to 1,911 and the Nasdaq composite fell 11 points, or 0.3 percent, to 4,504.
KEEPING SCORE: The Dow Jones industrial average lost 61 points, or 0.4 percent, to 16,089 as of 1:55 p.m. Eastern time. The Standard & Poor’s 500 index gave up 21 points, or 1.1 percent, to 1,882 and the Nasdaq composite fell 86 points, or 1.9 percent, to 4,430. A FISTFUL OF (WEAKENED) DOLLARS: A sharp decline in the dollar against the major other currencies was helping the market to rebound. The U.S. dollar index was down 1.5 percent, a large move for the foreign exchange market, with nearly that entire decline happening in afternoon trading. Many U.S. companies have been complaining that the appreciation of the dollar was eroding their earnings by making U.S. exports less profitable.
SAFETY: Investors moved money into traditional safe-havens: stocks that pay high dividends, U.S. government bonds, and precious metals. A weaker dollar also tends to send commodity prices higher. That was a relief to investors as well since a plunge in the price of crude oil has been decimating profits at energy companies.
The Dow Jones utility index, a basket of 15 utility companies, rose 1 percent. That index is up more than 8 percent this year. Utilities and other companies that pay large dividends are popular at times of uncertainty because they provide a regular return and are large, mature businesses that tend to stand up well during economic downturns. The price of U.S. crude oil jumped $2.40, or 8 percent, to close at $32.28 a barrel, which helped lift up energy stocks. Metals like gold, silver and copper all rose more than 1 percent.
SAFETY: Investors are still putting money into traditional safe-havens: stocks that pay high dividends, U.S. government bonds, and precious metals.
The Dow Jones utility index, a basket of 15 utility companies, rose 1.4 percent. That index is up more than 8 percent this year. Utilities and other companies that pay large dividends are popular at times of uncertainty because they provide a regular return and are large, mature businesses that tend to stand up well during economic downturns.
Some traders are taking that a step further.Some traders are taking that a step further.
“I’ve been telling clients to be in all cash,” said Ian Winer, co-head of equities trading at Wedbush Securities. “There’s too much credit risk out there, S&P 500 earnings could be down this year and it seems an increasing possibility that the U.S. could be in a recession in 2017.”“I’ve been telling clients to be in all cash,” said Ian Winer, co-head of equities trading at Wedbush Securities. “There’s too much credit risk out there, S&P 500 earnings could be down this year and it seems an increasing possibility that the U.S. could be in a recession in 2017.”
Bond prices rose. The yield on the benchmark U.S. 10-year note fell to 1.84 percent from 1.85 percent the day before. Gold rose $17.50, or 1.6 percent, to $1,144.50 an ounce.
BANKING ISSUES: Financial stocks were getting another beat-down. Investors worry that lenders could suffer if more energy companies default on their loans. They also think the Federal Reserve might postpone its interest rate increases, which would have helped banks earn more money by raising the rates they charge on loans.
Bank of America fell 52 cents, or 4 percent, to $12.71, Morgan Stanley fell 54 cents, or 2.2 percent, to $23.96 and Wells Fargo fell $1.70, or 4 percent, to $46.77.
ENERGY RECHARGE: Crude oil prices recovered some ground after two days of steep losses. New York crude gained $1.93, or 6.5 percent, to $31.80 a barrel while Brent crude, used to price international oils, jumped $1.99, or 6 percent, to $34.71 a barrel in London.
CUTBACKS: Yahoo slumped $1.91, or 6.6 percent, to $27.15 after the company announced late Tuesday it would cut 1,700 jobs and sell some of the company’s struggling businesses.CUTBACKS: Yahoo slumped $1.91, or 6.6 percent, to $27.15 after the company announced late Tuesday it would cut 1,700 jobs and sell some of the company’s struggling businesses.
ON A DIET: Chipotle fell $20.40, or 4 percent, to $455.20 after the company said the E. coli outbreak at its stores hurt sales more than anticipated. Chipotle also disclosed it was now under investigation by Federal regulators over the outbreak.ON A DIET: Chipotle fell $20.40, or 4 percent, to $455.20 after the company said the E. coli outbreak at its stores hurt sales more than anticipated. Chipotle also disclosed it was now under investigation by Federal regulators over the outbreak.
CURRENCIES: The euro rose against the dollar to $1.1151, the dollar fell against the Japanese yen to 117.14 yen, and the dollar fell against the British pound to $1.4641.CURRENCIES: The euro rose against the dollar to $1.1151, the dollar fell against the Japanese yen to 117.14 yen, and the dollar fell against the British pound to $1.4641.
Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.