Wednesday, June 20, 2018
Business

Stocks pull back after 4 weeks of gains; Yahoo slips

NEW YORK — Stocks fell moderately on Monday as investors took a break after four weeks of gains that brought the market to record highs.

Energy companies fell more than the rest of the market as the price of oil took another turn lower. Yahoo fell after Verizon Communications announced it would buy most of Yahoo's Internet businesses for $4.83 billion.

The Dow Jones Industrial Average lost 77.79 points, or 0.4 percent, to 18,493.06. The Standard & Poor's 500 index lost 6.55 points, or 0.3 percent, to 2,168.48 and the Nasdaq composite lost 2.53 points, or 0.1 percent, to 5,097.63.

It's common for a market that has run up quickly to retreat. With the slow summer trading season and lack of economic news, traders say there are few reasons to be buying the market right now.

"This is a broad, but benign, selloff," said Ryan Larson, head of U.S. equity trading for RBC Global Asset Management.

Larson pointed out the recent price-to-earnings ratio on the S&P 500, or the amount of money that investors are paying for each dollar of earnings, which was trading at nearly 20. That's far above the 14-16 times that investors are typically comfortable with.

"It's another reason why the market looks fatigued at the moment," he said.

This week, while heavy on individual company earnings, is light on economic data. Later this week the Bank of Japan and Federal Reserve will hold policy meetings. With Japan's economy barely growing, economists are speculating about whether its central bank may push more stimulus, likely lowering its interest rate further into negative territory when it announces its decision on Friday.

The U.S. economy is in better shape than other advanced economies, but expectations are that the Fed will hold interest rates steady and look to raise interest rates later this year. Securities that bet on which way the Fed will move interest rates show only a 10 percent chance of a rate increase this week. The Fed's two-day meeting starts today.

Technology companies will dominate quarterly earnings news this week, including results from Apple, Amazon, Google and Facebook. Their reports are also likely to heavily impact trading this week.

In individual company news, Yahoo fell $1.06, or 2.7 percent, to $38.32 after the company announced that Verizon would buy Yahoo's advertising, media and email businesses for $4.83 billion, ending a five-month auction. Verizon will add Yahoo to its portfolio of recently purchased media companies, including AOL.

Once finished, Yahoo will be a shell of its former self, existing mainly as a holding company for its Alibaba and Yahoo Japan investments, as well as its patent portfolio. Verizon fell 23 cents, or 0.4 percent, to $55.87.

Oil prices continued on their month-long slide. The price of crude fell $1.06, or 2.4 percent, to close at $43.13 a barrel. U.S. crude oil is down 12 percent this month. Brent crude, the global benchmark, dropped 97 cents, or 2.1 percent, to close at $44.72 a barrel in London.

The 2 percent drop in oil prices dragged down major energy companies. Chevron lost $2.59, or 2.5 percent, to $103.07 and Exxon Mobil gave up $1.81, or 2 percent, to $92.20, the two biggest drops in the Dow Jones Industrial Average.

In other energy trading, wholesale gasoline fell 3 cents to $1.33 a gallon, heating oil fell 3 cents to $1.32 a gallon and natural gas also fell 3 cents to close at 2.75 per 1,000 cubic feet.

U.S. government bond prices didn't move much. The yield on the 10-year Treasury note held steady at 1.57 percent. The dollar fell to 105.85 yen from 106.17 yen. The euro rose to $1.0989 from $1.0961.

The price of gold fell $3.90 to $1,319.50 an ounce, silver fell 4 cents to $19.65 an ounce and copper fell 2 cents to $2.22 a pound.

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