Tech companies lead US stocks higher after rocky start

Friday, June 29, 2018, Vol. 42, No. 26
The Associated Press

U.S. stocks closed higher Monday after a last-minute market rally erased the losses from a daylong slump.

Technology companies led the market rebound. Banks and health care stocks also notched gains. Energy took the biggest losses as crude oil prices declined. Big department store chains and consumer goods companies also declined.

The stock market, which was coming off two weekly losses in a row, was in the red for most of the day following disappointing economic data out of Asia that left global indexes sharply lower.

Trading volume was lighter than usual ahead of Tuesday, when U.S. markets are scheduled to close early for the Independence Day holiday the following day.

"We opened very low and then, during the course of the day, the market started to basically gain some momentum," said Quincy Krosby, chief market strategist at Prudential Financial. "The volume in the market typically comes down markedly in a holiday week, and moves can be exaggerated to the upside as well as to the downside by events, headlines or data."

The S&P 500 index rose 8.34 points, or 0.3 percent, to 2,726.71. The Dow Jones Industrial Average gained 35.77 points, or 0.2 percent, to 24,307.18. The Nasdaq composite jumped 57.38 points, or 0.8 percent, to 7,567.69. The Russell 2000 index of smaller-company stocks picked up 12.02 points, or 0.7 percent, to 1,655.09.

A slump in global markets weighed on U.S. stocks from the get-go Monday, after new economic reports out of China and Japan disappointed traders. A German government crisis also weighed on markets in Europe, which closed lower.

"You saw some of the more tariff-sensitive stocks a little bit weaker on the opening," said JJ Kinahan, chief market strategist for TD Ameritrade. "It's all headline news trading."

U.S. stocks gradually pared their losses as the day went on, led by gains in technology stocks.

Investors continued to focus on global trade tensions. The European Union warned the Trump administration Monday that it might slap tariffs on $300 billion of U.S. exports in retaliation for Trump's threatened tariffs on European cars. On Sunday, Canada started imposing tariffs on billions of dollars of U.S. goods in response to the Trump administration's duties on Canadian steel and aluminum.

The U.S. is set to impose a 25 percent tariff on up to $50 billion of Chinese products starting this Friday. In response, China has said it will raise import duties on $34 billion worth of American goods.

"We're just not sure what's going to happen with that," said Rob Haworth, senior investment strategist with U.S. Bank Wealth Management. "We don't think a lot of the July 6 tariffs have yet to be fully priced into the market."

Technology companies led the market rebound. Micron Technology led the sector, gaining 3.9 percent to $54.48.

"You're getting a reaction to last week, when technology did so poorly and now they're getting a bounce here," Haworth said.

Tracking shares in computer maker Dell vaulted 9 percent to $92.20 after it announced it would go public again after five years as a private company. Meanwhile, shares in VMware jumped 10.2 percent to $162.02 on speculation that Dell may buy the rest of the business software company, which will also issue a special dividend to shareholders.

Wynn Resorts sank 7.9 percent to $154.14 after June revenue growth at the casino operator's resorts in Macau fell well short of Wall Street's expectations.

Shares in several department store chains declined. Nordstrom fell 2.1 percent to $50.71, while Macy's lost 2.4 percent to $36.54. Kohl's gave up 2.2 percent to $71.33.

Bond prices fell. The yield on the 10-year Treasury rose to 2.87 percent from 2.86 percent late Friday.

The increase in bond yields helped lift bank shares. Interest rates on mortgages and other consumer loans tend to move along with bond yields. Rising rates translate into bigger profits for banks from credit cards, mortgages and other consumer loans. Capital One Financial gained 2.1 percent to $93.78.

Benchmark U.S. crude fell 21 cents to settle at $73.94 a barrel in New York. Brent crude, used to price international oils, lost $1.93, or 2.4 percent, to close at $77.30 in London. The decline in oil prices weighed on energy stocks. Cimarex Energy lost 4 percent to $97.66.

The dollar fell to 110.86 yen from 110.88 yen on Friday. The euro weakened to $1.1610 from $1.1669.

Gold fell $12.80, or 1 percent, to $1,241.70 an ounce. Silver dropped 36 cents, or 2.2 percent, to $15.84 an ounce. Copper lost 2 cents to $2.94 a pound.

In other energy futures trading, heating oil dropped 5 cents to $2.16 a gallon. Wholesale gasoline also fell 5 cents to $2.11 a gallon. Natural gas slid 6 cents to $2.86 per 1,000 cubic feet.

Major indexes in Europe finished in the red. Germany's DAX fell 0.6 percent, while France's CAC 40 lost 0.9 percent. Britain's FTSE 100 gave up 1.2 percent.

Markets in Asia were overshadowed by weaker than expected Chinese manufacturing data and a softening in Japan's economic outlook.

China's manufacturing activity slowed in June, adding to concerns that the economy is cooling due to tighter government controls on lending. Meanwhile, the Bank of Japan's "tankan" survey measuring confidence among large-scale manufacturers declined for the first time in two years.

Japan's benchmark Nikkei 225 index plunged 2.2 percent and South Korea's Kospi tumbled 2.4 percent. Australia's S&P/ASX 200 lost 0.3 percent. Taiwan's benchmark fell but Southeast Asian indexes were mixed. Hong Kong's markets were closed for a market holiday.

U.S. stock markets will close early at 1 p.m. ET Tuesday ahead of the Independence Day holiday on Wednesday.