United States stocks have biggest drop since August, led by health care

Javier Howell
February 1, 2018

Shares of utilities and real-estate companies, considered by many investors to be bondlike due to their relatively hefty dividends, were among the biggest decliners in the S&P 500, falling alongside U.S. Treasury prices.

The Dow Jones Industrial Average fell 177.23 points, or 0.67%, to 26,439.48, the S&P 500 lost 19.34 points, or 0.67%, to 2,853.53 and the Nasdaq Composite dropped 39.27 points, or 0.52%, to 7,466.51.

Stock were on track for their best January outing in years - the Dow logged a 5.5% gain for the month through Tuesday, the S&P 500 rose 5.6%, the strongest month for both indexes since March, 2016.

The S&P 500 pulled back 0.8 percent, with health care and energy as the worst-performing sectors.

Art Hogan, chief market strategist at B. Riley FBR said: "We've had a unilateral move higher [in stocks] to start things off and people are realising this is not sustainable". Across the Korean Strait, the Kospi bucked the downward trend to climb 0.31%.

The 352-point drop to its session low was the Dow's steepest intraday point drop since May 17. They were pressured by a spike in Treasury bond yields ahead of a Federal Reserve policy announcement on Wednesday that could signal an acceleration in interest rate increases this year.

The Standard & Poor's 500 index rose 15 points, or 0.6 per cent, to 2,837.

It was a rocky start to an action-packed week, which will feature U.S. President Donald Trump's first official State of the Union speech late Tuesday.

Elsewhere, the Stoxx Europe 600 fell 0.2%, pressured by declines in shares of utilities and real-estate companies.

Besides rising yields, telecom stocks were also hit by reports that the US government was planning to build a super-fast 5G wireless network to counter China's spying on calls. But some investors speculated that the growing strength in the US economy and labor market could prompt the central bank to perhaps forecast an extra rate increase this year. Check Point Software (CHKP) took the hardest early hit among Nasdaq 100 stocks, down more than 3% after a mixed fourth-quarter performance. On the other hand, other indexes closed higher.

Other reports by Insurance News

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