Bank stocks weaken, but small-company stocks hold up well

Banks and other large U.S. stocks fell Thursday, but smaller companies climbed, making for a mixed finish on Wall Street. Trade issues again weighed on the market as representatives of the auto industry told Congress they opposed tariffs on imported cars and car parts being proposed by the Trump administration.

Major banks fell as interest rates decreased. Weak second-quarter results also weighed on American Express and Bank of New York Mellon. President Trump told CNBC he is “not happy” the Federal Reserve has been raising interest rates, which had little effect on the stock market but did send the dollar slightly lower.

Companies that make and distribute drugs fell after the Trump administration proposed changes to government rules on drug price rebates. Aluminum producers sank after Alcoa said the U.S. tariffs on imported aluminum are costing it at least $12 million a month.

Representatives of car manufacturers, suppliers and dealers appeared before Congress along with foreign diplomats. They were seeking to head off the Trump administration’s proposed tariffs on imported cars and car parts.

The U.S. imported $335 billion in autos and parts in 2017, so those tariffs could dwarf the taxes the administration has placed on imported steel and aluminum, as well as goods from China. General Motors and Daimler have both warned that tariffs could have major effects on their businesses.

Lindsey Bell, investment strategist with CFRA Research, said most consumers haven’t noticed the effects of the tariffs yet, but that will change if cars are taxed.

“It will significantly increase the price of a car, and the consumer will definitely pull back” on spending, she said, adding that foreign automakers with factories in the United States might move those jobs overseas.

“There’s a lot of jobs that could be lost if these tariffs go through,” she said.

The Standard & Poor’s 500 index slid 11.13 points, or 0.4%, to 2,804.49. The Dow Jones industrial average fell 134.79 points, or 0.5%, to 25,064.50. The Nasdaq composite fell 29.15 points, or 0.4%, to 7,825.30.

The Russell 2000 index of smaller-company stocks rose 9.44 points, or 0.6%, to 1,701.31. Smaller retailers did especially well. Smaller companies tend to do better than larger ones when trade tensions flare up because they do a greater proportion of their sales in the United States.

More stocks rose than fell on the New York Stock Exchange.

General Motors said last month that tariffs on imported cars might cause it to cut jobs in the United States. Its stock slid 1.4% to $39.31. Tesla fell 1.1% to $320.23. Auto parts retailer BorgWarner declined 2.1% to $45.03.

Second-quarter results and forecasts from U.S. companies continued to dominate trading. American Express fell 2.7% to $100.17 after it set aside more money to cover potential bad loans. Bank of New York Mellon sank 5.2% to $52.73.

EBay slumped 10.1% to $34.11 after it reported lower sales than analysts expected.

Trump’s criticism of the Federal Reserve was unusual, and investors wondered if it could slow the pace of interest rate increases even though the Fed is independent and Trump said he didn’t plan to get involved in its decision-making. The dollar fell to 112.46 yen from 112.84 yen. The euro slipped to $1.1644 from $1.1646.

Bond yields were already falling before Trump’s comments, and they fell a bit more afterward. The yield on the 10-year Treasury note fell to 2.83% from 2.87%.

Real estate investment trusts and utilities, which pay big dividends, did far better than the rest of the market. Many investors consider those stocks to be alternatives to bonds, so they tend to do well when bond yields fall.

Cable and internet provider Comcast said it won’t make another bid for 21st Century Fox’s entertainment business and will instead focus on trying to buy European pay-TV operator Sky. Fox shareholders are scheduled to vote on Disney’s $71-billion offer next week.

Comcast rose 2.6% to $34.91. Fox edged down 0.1% to $46.65. Disney rose 1.3% to $112.13. In London, shares of Sky fell 1.5%.

Aluminum producer Alcoa sank 13.3% to $41.56 after it forecast a smaller pretax profit. It said the tax on imported aluminum is costing it $12 million to $14 million a month. Century Aluminum shares skidded 12.1% to $13.09.

Companies that make and distribute drugs fell after the Trump administration proposed changes to government rules on drug price rebates. AbbVie slid 4.7% to $89.95. Drugstore and pharmacy benefits manager CVS Health fell 2.6% to $66.14.

Benchmark U.S. crude rose 1% to $69.46 a barrel in New York. Brent crude, used to price international oils, fell 0.4% to $72.58 a barrel in London.

Wholesale gasoline stayed at $2.04 a gallon. Heating oil stayed at $2.09 a gallon. Natural gas rose 1.8% to $2.77 per 1,000 cubic feet.

Gold fell 0.3% to $1,224 an ounce and silver fell 1.1% to $15.40 an ounce. Copper dropped 2.3% to $2.70 a pound.

Germany’s DAX fell 0.6%, as did France’s CAC 40. Britain’s FTSE 100 rose 0.1%.

Japan’s Nikkei 225 slipped 0.1%. South Korea’s Kospi shed 0.3%. Hong Kong’s Hang Seng fell 0.4%.

UPDATES:

2:30 p.m.: This article was updated with closing prices, context and analyst comment.

This article was originally published at 9:15 a.m.