Financial companies drag down US stock indexes

The DJIA or Dow Jones Industrial Average went up on December 12, even though it was battered by financial companies trying to batten the hatches on all the important American stock exchanges. The DJIA went up for its sixth consecutive session and broke another record. The declines in American Express and Goldman Sachs Group were compensated by gains in Exxon Mobil and Johnson & Johnson.

Up and down

The DJIA went up 0.2 percent or 39.58 percent to touch 19796.43. The Standard & Poor 500 bled 0.1 percent or 2.57 points to 2256.96. It was led by a fall of 0.9 percent in financials sector. Similarly, there was a fall of 0.6 percent or 31.96 points of the Nasdaq Composite. It fell to 5412.54, mostly on declines of pharmaceutical shares. There was a drop of 0.7 percent in Nasdaq Biotechnology Index.

In contrast, energy shares and oil prices went up after an oil producers’ group consented to scale back output along with Organization of the Petroleum Exporting Countries (OPEC). There was a rise of 0.7 percent in the energy sector of S&P 500. A gain of 2.2 percent or $1.98 to touch $90.98 was done by Exxon Mobil. FMC Technologies went up by two percent or 72 cents to 36.08. Helmerich & Payne added 1.7 percent or 1.43 to 83.18. There was a drop of 0.5 percent by Stoxx Europe 600. This happened after five successive sessions of gains.

State of finance

For financial firms, it was a rare decline. The sector has largely benefited from expectations of relaxed regulars under the Trump presidency. The financial sector in S&P 500 closed much lower during the four sessions from November 8. They added 17 percent over the period. This can be contrasted with the 5.5 percent gain of S&P 500. There was also a rise in the financials along with the expectations of steeper interest. The latter will result in the increased profitability of banks.

It is a belief among considerable number of investors that benchmark reserve rates will be upped by the Federal Reserve during the second week of December. It is also thought that it will continue on a slowly tightening path. Rick Anderson of Hull Investments is of the opinion that there is a possibility of investors entering a new phase of bull market. This will be characterized by steeper interest rates. The dollar may also become stronger.

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