U.S. stock indexes ended slightly lower Thursday as investors sold financials, consumer-discretionary and telecommunication shares, with Disney and Goldman Sachs exacting a hefty toll on the Dow industrials.
Investors were tracking Hurricane Irma and registering the latest policy stance from European Central Bank President Mario Draghi’s. The ECB left key interest rates unchanged, while Draghi indicated that the decision on how to taper a quantitative-easing program will come in October .
The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.48% finished the session down 0.44 point, or less than 0.1%, at 2,465.10, led by a 2.1% decline in telecommunications, a 1.7% loss in financials, and a 0.9% slide in the consumer-discretionary sector.
Banking stocks fell sharply following a drop in the 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +11.20% , which declined nearly 5 basis points to 2.061%. Lower bond yields can undercut banks’ business models of borrowing short-term and lending long.
The Financials Select Sector SPDR Fund /zigman2/quotes/209660484/composite XLF +2.18% closed down 1.7%, ending below a long-term trend line for the first time in 14 months, while PowerShares KBW Regional Banking Portfolio ETF /zigman2/quotes/201677893/composite KBWR +3.07% closed down 2.6%.
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.00% , meanwhile, lost 22.86 points, or 0.1%, to close at 21,784.78. Walt Disney Co . /zigman2/quotes/203410047/composite DIS +1.96% fell 4.4% after the entertainment giant’s CEO Bob Iger lowered Wall Street’s full-year guidance for earnings. Shares of Goldman Sachs Group Inc . /zigman2/quotes/209237603/composite GS +2.93% also weighed on the average, down 1.4%.
The tech-heavy Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +0.08% , meanwhile, eked out a slight gain, up 4.55 points, or 0.1%, at 6,397.37.
Some analysts suggested that the combination of devastating hurricanes pummeling the U.S. and the Caribbean and the potential escalation of nuclear threats in North Korea is keeping investors cautious. Category 5 Hurricane Irma has wrecked a string of Caribbean islands as it barrels toward the Florida coast.
“Investors don’t want to go into the weekend when North Korea is scheduled to show its military prowess during the Founders day celebration without their hedges in place,” said Quincy Krosby, chief market strategist at Prudential Financial.
That said, stocks have remained largely resilient in the face of escalating geopolitical tensions, storm damage, lofty valuations, and central-bank moves.
Hurricane Irma comes just two weeks after Hurricane Harvey hit the Texas and Louisiana Gulf Coast, where damages are estimated by AccuWeather to be up to $190 billion.
The insurance sector slumped, with the iShares U.S. Insurance ETF /zigman2/quotes/205476255/composite IAK +0.95% and the PowerShares KBW Property & Casualty Insurance Portfolio /zigman2/quotes/209901112/composite KBWP +0.70% closing sharply lower on the back of the storm concerns. The iShares ETF was off 2.1%, while the PowerShares ETF was down about 3%. Both are at least 4% lower so far in September.
Against that backdrop, the Senate on Thursday advanced a deal struck between President Donald Trump and Democratic leaders on Wednesday that rolled together emergency relief for victims of Hurricane Harvey with a short-term extension of the government’s funding and its borrowing limit.
In a 80-17 vote ended debate on legislation approving $15.25 billion for relief and recovery efforts for the Harvey and Irma hurricanes, as well as provisions keeping the government running and its debt limit suspended until Dec. 8.
Earlier in the day, Trump and Senate Minority Leader Chuck Schumer reportedly agreed to pursue a deal that would remove the need for Congress to repeatedly raise the U.S. debt ceiling.
The political machinations may leave investors wondering about the prospect of key legislative policies becoming a reality, including tax reform, which some have credited with lifting equities.