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Dow's Postelection Sizzle Cools -- WSJ

14 Jan 2017 7:32 am

Blue-chip index drops 0.4% during the week as investors await Trump policy details
By Corrie Driebusch and Riva Gold 

The Dow Jones Industrial Average slipped Friday, notching a weekly decline as its postelection rally tapered off.

U.S. stocks have largely moved sideways over the past month, keeping the Dow industrials just shy of the 20000 milestone, after stocks soared following the election on hopes that the new administration would help accelerate a rise in growth and inflation.

Postelection trends in government bonds, the dollar and gold have also showed signs of reversal.

On Friday, the Dow industrials declined 5.27 points, or less than 0.1%, to 19885.73, ending the week down 0.4%.

The S&P 500 rose 4.20 points, or 0.2%, Friday to 2274.64, and the Nasdaq Composite added 26.63 points, or 0.5%, to 5574.12. Trading was quiet, with the fewest U.S. shares changing hands since Dec. 30.

The S&P 500 fell 0.1% for the week, while the Nasdaq Composite rose 1%.

On Friday, shares of J.P. Morgan Chase, Bank of America and Wells Fargo rose after the banks reported quarterly results, sending the S&P 500 financial sector up 0.5%.

Shares of J.P. Morgan rose 46 cents, or 0.5%, to $86.70 after the largest U.S. bank by assets said its quarterly profit beat estimates, boosted by strong trading results. Bank of America's stock gained nine cents, or 0.4%, to 23.01 as its earnings per share beat analysts' expectations. Wells Fargo gained 81 cents, or 1.5%, to 55.31 despite its earnings and revenue falling short of analysts' estimates.

However, shares of financial companies in the S&P 500 were unable to fully recover from declines in prior days, and the sector ended 0.1% lower for the week.

Health-care shares in the S&P 500 slipped 0.1% on the week, largely coming back from Wednesday's tumble after President-elect Donald Trump said the drug industry was "getting away with murder" during his first press conference since Election Day.

The Nasdaq Biotechnology Index on Friday was little changed from a week earlier, after posting its biggest one-day fall since Oct. 11 on Wednesday.

The dollar stumbled after some investors had expected more details on Mr. Trump's plans for fiscal stimulus, deregulation and tax cuts in the press conference. The WSJ Dollar Index, which measures the U.S. currency against 16 others, sank 1% in the week, its worst performance since the week ended Nov. 4.

"I think the market had been giving President-elect Trump a lot of the benefit of the doubt that his pro-business ideas or plans are going to be ultimately enacted, but that antibusiness things such as border walls and trade wars will probably not happen," said Randy Frederick, vice president of trading and derivatives at Charles Schwab.

Between now and the inauguration on Jan. 20, however, "the market is in a wait-and-see mode," he said, with investors looking for clarity on the new president's top agenda items and the timing of expected policy changes.

In the month following the election, financial shares jumped on expectations for higher U.S. interest rates and a rollback of regulation, helping send major stock indexes to record highs. Between Nov. 8 and Dec. 8, financial stocks in the S&P 500 rose 18%. At the same time, the yield on the 10-year Treasury note rose about a half of a percentage point.

Those moves have eased since then.

"Many investors felt the rally may have been way too quick postelection, " said Nicholas Angilletta, head of capital markets for Deutsche Bank Wealth Management Americas.

The yield on the benchmark 10-year U.S. Treasury note fell for the fourth consecutive week, settling at 2.380% Friday. Yields fall as prices rise.

Investors also piled into gold. For the week, gold for January delivery advanced 2% to $1,195.30 an ounce, its largest gain since the week ended Nov. 4.

Meanwhile, oil slid 3% for the week to $52.37 a barrel.

Write to Corrie Driebusch at corrie.driebusch@wsj.com and Riva Gold at riva.gold@wsj.com

(END) Dow Jones Newswires

January 14, 2017 02:32 ET (07:32 GMT)

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