Drugmaker losses pull stocks lower; small-cap surge goes on

Friday, November 18, 2016, Vol. 40, No. 47

NEW YORK (AP) — Major U.S. stock indexes slipped Friday as drug companies dragged the market lower. Small-company stocks bucked the downward trend and continued to climb, and bond yields rose to their highest level in a year.

Drugmakers like Merck and biotech company Amgen took some of the biggest losses Friday. Weak results from Gap and Abercrombie & Fitch hurt retailers as investors kept a close eye on the upcoming holiday season.

Small companies including regional banks continued to make large gains. Those stocks have risen sharply since the presidential election last week and are now at record highs.

"Some of the proposals that (President-elect Donald) Trump has promoted, specifically deregulation and also some of his trade proposals, are better for small companies than potentially they are for large ones," said Katie Nixon, chief investment officer for Northern Trust.

The Dow Jones industrial average slid 35.89 points, or 0.2 percent, to 18,867.93. The Standard & Poor's 500 index lost 5.22 points, or 0.2 percent, to 2,181.90. The Nasdaq composite touched a record high early on, but turned lower and gave up 12.46 points, or 0.2 percent, to 5,321.51.

That's not a big loss, but the major indexes hadn't fallen that much since before the presidential election. Still, the S&P 500 and Nasdaq finished substantially higher this week after their big gains the week before. But indexes of smaller companies, like the Russell 2000 and the S&P 600, did better. They are on 11-day winning streaks and have hit all-time highs.

Among small-company stocks, mortgage lending service company LendingTree added $6.80, or 7.3 percent, to $100 and coal miner Cloud Peak Energy rose 79 cents, or 15.8 percent, to $5.79.

Losses for drug companies weighed down health care stocks. Botox maker Allergan retreated $8.20, or 4.1 percent, to $191.78 and biotech giant Amgen fell $2.13, or 1.4 percent, to $145.23. Hepatitis C drugmaker Gilead Sciences shed 96 cents, or 1.3 percent, to $74.62.

Drug company stocks are coming off their biggest weekly gain in two years. The stocks had been falling in the months leading up to the election because investors worried that under a Hillary Clinton presidency, the federal government would take steps to rein in drug prices. Those kinds of steps are less likely under a Trump presidency and a Republican-controlled Congress.

The dollar continued to climb. It's near one-year highs against the euro and six-month highs against the yen. The dollar rose to 110.63 yen from 109.89 yen. The euro fell to $1.0599 from $1.0626.

The dollar hasn't been this strong since early 2003. Nixon of Northern Trust said that's affecting big multinational companies because it can hurt their sales outside the U.S., but it's less of a problem for smaller, domestically-oriented companies.

Investors continued to sell U.S. government bonds at a rapid clip, and bond prices wobbled and turned lower. The yield on the 10-year Treasury note rose to 2.34 percent from 2.30 percent. Bond prices have fallen hard since the election and yields are now at their highest in a year.

Teen clothing company Abercrombie & Fitch plunged $2.33, or 13.8 percent, to $14.60 after it reported weak sales and a smaller profit than analysts had expected. Gap's said fewer people visited its stores heading into the holiday season. Its stock gave up $5.10, or 16.6 percent, to $25.61. Sporting goods Hibbett Sports retailer cut its annual forecasts after a weak third-quarter report. It dropped $4.90, or 10.8 percent, to $40.40.

Shoppers are not buying as many clothes and moving toward discount chains. That trend continued as discount retailer Ross Stores rose $2.47, or 3.8 percent, to $68 after it posted a better-than-expected profit and sales.

Companies that sell common household products are also moving lower. Procter & Gamble gave up $1.07, or 1.3 percent, to $82 and drugstore operator Walgreens Boots Alliance slumped 72 cents to $83.27. Those companies have fallen since the election as investors buy companies that could benefit more from faster economic growth.

Benchmark U.S. crude rose 27 cents to close at $45.69 a barrel in New York, while Brent crude, which is used to price international oils, added 37 cents to $46.86 a barrel in London. Energy companies traded higher. Chevron rose $1.08, or 1 percent, to $109.20 and ConocoPhillips jumped $1.15, or 2.6 percent, to $44.76.

Gold fell $8.20 to $1,208.70 an ounce. Silver lost 15 cents to $16.62 an ounce. Copper dipped 2 cents to $2.47 a pound.

In other energy trading, wholesale gasoline stayed at $1.34 a gallon. Heating oil picked up 1 cent to $1.46 a gallon. Natural gas climbed 14 cents, or 5.2 percent, to $2.84 per 1,000 cubic feet.

France's CAC 40 fell 0.5 percent and the FTSE 100 in Britain dipped 0.3 percent. The German DAX lost 0.2 percent. Japan's benchmark Nikkei 225 index added 0.6 percent as the yen hit a six-month low, helping shares of the country's big exporters. South Korea's Kospi shed 0.3 percent and Hong Kong's Hang Seng rose 0.4 percent.