S&P 500 Slips on China Tension as Financial Rally Takes Pause

Wharton's Siegel: Stocks 'Not Cheap' on Way to Dow 20,000

U.S. stocks slid as a report that China’s navy seized a U.S. drone in international waters in the South China Sea spurred geopolitical concern and financial companies dropped for the third day this week.

The S&P 500 fell 0.2 percent to 2,258.07 by 4 p.m. in New York. Oil prices rose and 10-year Treasury yields declined as the Pentagon demanded that China immediately return the underwater drone in a confrontation certain to exacerbate tensions in a region where the government in Beijing has sought to assert greater control.

U.S. Market

  • Real estate and utility shares up 1.2%; phone companies add 0.6%
  • Financial shares and tech drop at least 0.8%
  • The Dow jumped 8.2% in the five weeks following Donald Trump’s U.S. election win, the biggest gain in the period that greeted any president since 1900
  • Equity funds globally saw “huge” investment inflows in the latest week as the “great rotation” out of bonds and into riskier assets such as stocks accelerated, according to a note by Bank of America Corp.’s Merrill Lynch unit. Since the U.S. election, investors have poured $63 billion into equity funds, following outflows of $151 billion in the January-October period, the report showed
  • The S&P 500’s pause near a record high shows little sign of trend exhaustion, and its next set of bullish objectives rest at the 2,285-2,296 area, JPMorgan Chase & Co.’s technical analyst Jason Hunter wrote in a note
  • The expiration of some futures and options on stocks and indexes Friday, known as quadruple witching, added to stock volatility

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