NEW YORK — U.S. stock indexes found their footing after a sharp early loss and finished mixed. Technology companies sank for the third day in a row.
Stocks slumped in morning trading following big declines late last week. Some of the largest losses went to technology companies, including payment and credit card companies. Indexes in Europe also dropped as Italy vowed to ramp up spending that will increase its deficit.
A sharp increase in bond yields last week had startled investors and prompted them to shift money out of stocks. Bond markets in the U.S. were closed for the Columbus Day holiday and stock trading was relatively light.
Banks, which often rise along with interest rates, continued their advance. High-dividend companies, which tend to fall when yields go up, recovered some of their losses from last week.
Kristina Hooper, chief global market strategist for Invesco, said technology companies have dropped because investors are concerned that they are vulnerable as the Trump administration wraps up trade negotiations with Mexico, Canada and Korea and zeroes in on China.
“The U.S. has made very significant concessions (to those countries), and I expect them to do that with Japan as well,” she said. “The ultimate goal is to bring China to its knees.”
The S&P 500 index dipped 1.14 points to 2,884.43. The Dow Jones Industrial Average reversed an early loss of 223 points and rose 39.73 points, or 0.2 per cent, to 26,486.78.
The Nasdaq composite sank 52.50 points, or 0.7 per cent, to 7,735.95. The Russell 2000 index slipped 2.60 points, or 0.2 per cent, to 1,629.51. The Nasdaq and Russell are each coming off their worst week since late March.
Among payment technology companies, PayPal slid 3.2 per cent to $80.55 and Mastercard fell 2.3 per cent to $208.26. Other technology companies also struggled, as Microsoft lost 1.1 per cent to $110.85.
Alphabet, Google’s parent company, fell 1 per cent to $1,155.92 after it said the profiles of as many as 500,000 Google Plus accounts were exposed by a bug. The company said it is ending Google Plus for consumers.
Hooper, of Invesco, said technology companies have been returning big profits this year, so investors have been slow to recognize the harm that could come from the trade spat.
“There’s the potential for China to place an embargo on rare earth metals, which would be very disruptive to some parts of the tech industry,” she said. “Tech is not going to be unscathed in a trade war.”
Italy’s deputy premier vowed to press ahead with a plan to increase spending and the country’s deficit even after the European Commission expressed “serious concern” about the notion.
Italy’s FTSE MIB dropped 2.4 per cent and Italian bond prices dropped, sending yields higher. Germany’s DAX fell 1.4 per cent and the CAC 40 in France sank 1.1 per cent. In Britain, the FTSE 100 fell 1.2 per cent.
The euro sank to $1.1488 from $1.1525.
China’s government injected money into its cooling economy by reducing the level of reserves banks are required to hold, and its central bank told Chinese banks to lend more to entrepreneurs. Chinese leaders are trying to shore up economic growth that began to cool after Beijing tightened lending controls last year to rein in a debt boom.
Hong Kong’s Hang Seng retreated 1.4 per cent and the Kospi in South Korea fell 0.6 per cent. Japanese markets were closed for a holiday.
Brazil’s main stock index staged its biggest rally in two and a half years, jumping 4.6 per cent for its highest close since May after far-right candidate Jair Bolsonaro led the first round of presidential voting by an unexpectedly wide margin. He’s now the favourite in the final election later this month.
Bolsonaro has repeatedly said he doesn’t understand the economy and has also spoken approvingly of Brazil’s 1964-1985 dictatorship. But business leaders and financial markets approved of his choice of an esteemed banker as head of his economic team, and they are opposed to the left-leaning policies of the Workers’ Party.
With bond markets in the U.S. closed, the yield on the 10-year Treasury note, an important benchmark for mortgages and other types of long-term loans, stayed at 3.22 per cent. That’s its highest in more than seven years and it’s aided bank stocks.
That continued Monday as BB&T gained 1.5 per cent to $9.74 and M&T Banks rose 1.1 per cent to $170.09.
High-dividend stocks rose Monday. Those stocks are often treated as an alternative to bonds because of their large payments to shareholders, which are similar to the yields from bonds.
Real estate investment trust Crown Castle International gained 1.4 per cent to $110.27 and Coca-Cola climbed 1.3 per cent to $46.48.
Benchmark U.S. crude slid 0.1 per cent to $74.29 a barrel in New York and Brent crude, used to price international oils, dropped 0.3 per cent to $83.91 a barrel in London.
Wholesale gasoline rose 0.4 per cent to $2.09 a gallon. Heating oil inched up 0.1 per cent to $2.39 a gallon. Natural gas jumped 3.9 per cent to $3.27 per 1,000 cubic feet.
Gold lost 1.4 per cent to $1,188.60 an ounce and silver slipped 2.2 per cent to $14.33 an ounce. Copper rose 0.1 per cent to $2.77 a pound.
The dollar fell to 112.98 yen from 113.73 yen late Friday.
