NEW YORK, N.Y. – U.S. stocks gave up large gains and finished barely higher Friday. Banks and technology companies traded higher, while stocks that pay large dividends fell thanks to a jump in bond yields.
Stocks were on track for large gains early in the day as reports showed consumers in both the U.S. and China appeared to be spending more. Banks rose after JPMorgan Chase and Citigroup disclosed solid quarterly results. But the gains faded as the day wore on. Drug company stocks continued to fall and energy companies slipped.
“The retail sales numbers on the surface looked pretty good but when you dig into them they were not that great,” said Mike Baele, managing director at U.S. Bank’s Private Client Reserve. “It seems like every good report we get, we get an offsetting weaker report.”
The Dow Jones industrial average, which had jumped as much as 162 points in the morning, finished up 39.44 points, or 0.2 per cent, at 18,138.38. The Standard & Poor’s 500 inched up 0.43 points to 2,132.98. The Nasdaq composite gained 0.83 points to 5,214.16.
Goldman Sachs was responsible for most of the Dow’s gains. It rose $3.10, or 1.9 per cent, to $170.52 after Britain’s High Court threw out a $1 billion lawsuit against the company. Libya’s sovereign wealth fund had accused Goldman Sachs of duping the fund into making risky deals.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.80 per cent from 1.75 per cent. Higher bond yields also help banks because they lead to higher interest rates on loans, and that allows banks to make bigger profits from lending.
JPMorgan Chase and Citigroup reported results were better than investors expected. The reports may have raised investor hopes for companies that will report their results next week, like Morgan Stanley, Charles Schwab, and BlackRock.
“It was a good kickoff to earnings season” for banks, said Baele. “It was actually some decent revenue as well with both investment banking and trading.”
Rising bond yields attracted investors’ attention, and they sold utilities, real estate investment trusts, and other stocks that pay large dividends as a result. Those payments are more appealing to investors seeking income when bond yields are low. PG&E Corp. fell 57 cents to $59.80 and Duke Energy slid 73 cents to $77.21.
The Commerce Department said retail sales bounced back in September as spending on restaurants, cars and gas improved. The agency also said business stockpiles and sales grew in August, which is a sign that economic growth could get stronger.
Reports suggested consumers in China are starting to spend more, which helped technology companies recover some of Thursday’s losses. Microsoft climbed 50 cents to $57.42 while Intel rose 48 cents, or 1.3 per cent, to $37.45 and Apple picked up 68 cents to $117.66.
While retail spending rose, the Commerce Department’s report also showed that spending at department stores decreased in September as consumers continued to do more of their shopping online. Kohl’s lost $1.44, or 3.2 per cent, to $43.68 and Macy’s fell $1.23, or 3.3 per cent, to $35.57.
Computer and printer maker HP said it will cut between 3,000 and 4,000 jobs over the next three years as demand for those products continues to fall. HP stock lost 67 cents, or 4.4 per cent, to $14.48.
Twitter fell 91 cents, or 5.1 per cent, to $16.88 after Salesforce.com told the Financial Times it isn’t interested in buying the company. Twitter has lost 32 per cent of its value since October 5th on reports that potential buyers were not going to make offers. Salesforce investors were not enthusiastic about the potential offer, and its stock jumped $3.64, or 5.2 per cent, to $74.27.
U.S. crude oil gave up 9 cents to $50.35 a barrel in New York. Brent crude, the international standard, fell 8 cents to $51.95 a barrel in London. That sent energy companies lower.
Health care stocks, which are by far the worst-performing industry on the S&P 500 this year, continued to slip. EpiPen maker Mylan lost $1.39, or 3.7 per cent, and closed at a three-year low of $36.49. Cancer drug maker Celgene sank $2.13, or 2.1 per cent, to $98.50.
In other energy trading, wholesale gasoline added 1 cent to $1.49 a gallon. Heating oil lost 1 cent to $1.57 a gallon. Natural gas slumped 6 cents, or 1.7 per cent, to $3.29 per 1,000 cubic feet.
The price of gold fell $2.10 to $1,255.50 an ounce. Silver lost 2 cents to $17.44 an ounce. Copper slipped 1 cent to $2.11 a pound.
The dollar rose to 104.18 yen from 103.60 yen. The euro rose to $1.0983 from $1.1053.
France’s CAC 40 jumped 1.5 per cent and Germany’s DAX rose 1.6 per cent. In Britain the FTSE 100 advanced 0.5 per cent. Japan’s benchmark Nikkei 225 index added 0.5 per cent and South Korea’s Kospi advanced 0.4 per cent. Hong Kong’s Hang Seng added 0.9 per cent. Thailand’s SET index climbed 4.7 per cent in the second day of trading after the death of Thailand’s king. The SET fell 4 per cent in September as investors worried about the monarch’s health and even with the rally Friday the index fell 1.8 per cent this week.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at http://bigstory.ap.org/journalist/marley-jay