Bank stocks weigh on shares; Dow backs further from 20,000

Thu Dec 29, 2016 5:41pm EST
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NEW YORK (Reuters) - U.S. and European shares, the dollar and bond yields all headed lower on Thursday, with traders using the quiet holiday period to book some profits on the heady gains stocks have seen in the final quarter of 2016 and reposition for the year ahead.

U.S. benchmark indexes were fractionally lower at the close in the aftermath of the S&P 500's biggest drop in more than two months a day earlier.

As in Europe, financial stocks, which have seen a tremendous run since the U.S. presidential election on the back of higher interest rates, were exerting the greatest downward pressure as bond yields retreated further from their recent highs. U.S. and European bank stocks both were down by more than 1.0 percent.

"We ran out of steam after the election rally. Now the market is at fair value and now it is: 'What is going to come next?'" said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis.

The stall on Wall Street put yet more distance between the blue chip Dow Jones Industrial Average and the much-vaunted 20,000 mark. The Dow has gained more than 8.0 percent since Donald Trump's victory in the Nov. 8 U.S. presidential election and has come to within 20 points of the milestone repeatedly without successfully crossing the line.

The Dow Jones Industrial Average .DJI fell 13.9 points, or 0.07 percent, to 19,819.78, the S&P 500 .SPX lost 0.66 points, or 0.03 percent, to 2,249.26 and the Nasdaq Composite .IXIC dropped 6.47 points, or 0.12 percent, to 5,432.09.

The Dow has yet to breach the 20,000 mark after repeatedly coming within 20 points of the milestone.

The S&P 500 financial index .SPSY dropped 0.7 percent, the worst-performing sector, but has still risen about 20 percent in 2016.

Europe's index of the leading 300 shares fell 0.5 percent. The yen's strength, along with a 17-percent slump in Toshiba Corp's shares after news of potential massive writedowns led to a downgrade to its credit ratings, contributed to a 1.3-percent fall for the Nikkei.   Continued...

Traders work on the floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 29, 2016. REUTERS/Andrew Kelly - RTX2WUQE