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News Story
Updated: 01/09/2018 01:19:01AM

Stocks erase morning losses

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FILE - This Thursday, Oct. 2, 2014, file photo, shows the facade of the New York Stock Exchange. U.S. stock indexes took a small step back from their record levels on Monday, Jan. 8, 2018, as their momentum slowed following a torrid start to the year. (AP Photo/Richard Drew, File)

By STAN CHOE

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NEW YORK — The stock market’s perfect start to the year rolled on, and the Standard & Poor’s 500 index shook off a bit of weakness on Monday to tick further into record territory.

Stocks had dipped in early trading, and the S&P 500 appeared to be on pace for its first down day of the year. But accelerating gains for dividend-paying and technology stocks helped offset losses in the health care industry, and the S&P 500 eked out a fifth straight gain. Other U.S. indexes edged higher or held close to their record levels.

“We’re getting a bit tired hearing ourselves talking about the solid economic backdrop and strong earnings growth, but that is the backdrop,” said Jon Adams, senior investment strategist for BMO Global Asset Management.

He is optimistic that stocks can continue to rise from their record levels due to the trends, even though the market is more expensive than it usually is relative to corporate profits. “Everyone is talking about the synchronized economic growth” around the world, he said, “but it’s something we haven’t seen for 10 years.”

The S&P 500 rose 4.56 points, or 0.2 percent, to 2,747.71. The last time the index led off a year with more consecutive gains was in 2010, when it had six.

The Dow Jones industrial average slipped 12.87, or 0.1 percent, to 25,283.00, the Nasdaq composite rose 20.83, or 0.3 percent, to 7,157.39 and the Russell 2000 index of small-cap stocks gained 1.80, or 0.1 percent, to 1,561.81.

One of the biggest gains in the S&P 500 came from Kohl’s, which jumped after it raised its earnings forecast for the year. The retailer said its sales climbed nearly 7 percent in November and December from a year earlier, and its new profit forecast easily topped Wall Street’s expectations.

Kohl’s rose $2.54, or 4.7 percent, to $56.90.

High-dividend stocks were also strong, with utilities up 0.9 percent for the biggest gain of the 11 sectors that make up the S&P 500. They got help from falling Treasury yields, which make dividends more attractive for investors seeking income. The yield on the 10-year Treasury dipped to 2.47 percent from 2.48 percent late Friday.

On the losing end for stocks was GoPro, which plunged after it said its revenue fell sharply last quarter. The company had to slash prices on cameras to drive more sales, and it reported preliminary fourth-quarter revenue that fell far short of Wall Street’s expectations.

The stock lost 96 cents, or 12.8 percent, to $6.56. GoPro also said it will cut more than 20 percent of its workforce.

Earnings are one of the best predictors for long-term performance of stocks, and a deluge of companies is set to begin reporting their results for the last three months of 2017. The pace will pick up later this week, and analysts and investors will likely be most focused on what CEOs say about their expectations for future earnings.

That’s because Wall Street is looking for profits to rise even higher after Washington approved cuts in corporate tax rates last month. The overhaul of the tax system may help some areas of the market more than others, and investors want to see how much companies will raise their forecasts. Stocks tend to track the trend of corporate profits more than anything else over the long term.

In overseas trading, South Korea’s Kospi index rose 0.6 percent, and the Hang Seng in Hong Kong gained 0.3 percent.

In Europe, France’s CAC 40 rose 0.3 percent, and Germany’s DAX was up 0.4 percent. The FTSE 100 in London dropped 0.4 percent.

The dollar slipped to 113.07 Japanese yen from 113.14 yen late Friday. The euro fell to $1.1965 from $1.2050, and the British pound edged down to $1.3564 from $1.3565.

Benchmark U.S. crude rose 29 cents to settle at $61.73 per barrel. Brent crude, the international standard, gained 16 cents to settle at $67.78 per barrel.

Natural gas rose 4 cents to $2.84 per 1,000 cubic feet, heating oil fell 1 cent to $2.05 per gallon and wholesale gasoline added 1 cent to $1.79 per gallon.

Gold fell $1.90 to $1,320.40 per ounce, silver lost 14 cents to $17.14 per ounce and copper dipped a penny to $3.22 per pound.


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