Bank stocks weigh on shares as Dow backs further from 20,000

US and European shares, the dollar and bond yields all headed lower on Thursday, with traders using the quiet holiday period to book some profits on the heady gains stocks have seen in the final quarter of 2016 and reposition for the year ahead.

US benchmark indexes were fractionally lower near midday in the aftermath of the S&P 500’s biggest drop in more than two months a day earlier. As in Europe, financial stocks, which have seen a tremendous run since the US presidential election on the back of higher interest rates, were exerting the greatest downward pressure as bond yields retreated further from their recent highs.

US and European bank stocks both were down by more than 1 per cent. London’ s top-flight index bucked the trend however, with the FTSE 100 index closing at a record high for the second day running.

Dublin

It was a quiet day in Dublin with the Iseq down nearly 0.3 per cent at the close at 6,509,13.

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Smurfit Kappa was one of the main losers with the packaging group down 1.1 per cent at €22.13.

Total Produce continued to rally following reports earlier in the week that US asset manager Franklin Templeton had increased its stake in the company to over 8 per cent. It was up 1.2 per cent in Dublin on Thursday at €1.95, having closed 2.1 per cent higher the day before.

Bank of Ireland also ended the day in positive territory, up 2.6 per cent to 23.6 cent.

Other movers on Thursday included Swiss-Irish food group Aryzta, down 2 per cent higher at €40.15.

London

London’s top index ended at a record high for the second day in a row thanks to a rally from precious metal stocks. The FTSE 100 Index rose 14.18 points to hit a new high of 7120.26, after the traditional Santa Rally helped it reach a record closing high of 7106.08 in the previous session.

Housebuilders struggled to make gains despite the latest survey from the Nationwide Building Society showing property values have increased by 4.5 per cent across 2016.

Shares in Barratt Developments were off 0.2 per cent and Persimmon was down 0.1 per cent.

Europe

European stocks faltered as investors proved unwilling to sustain a rally that’s lifted equities and pushed the FTSE 100 Index to an all-time high this week.

The Stoxx Europe 600 Index fell 0.2 per cent with trading volume less than half the 30-day average. Cyclical shares including banks, carmakers and miners – among the best performers in the final quarter of the year amid bets for stronger economic growth – fell the most.

The Stoxx 600 is down 1.4 per cent for the year and strategists expect the gauge to end 2017 at 366, 1.2 per cent higher than Wednesday’s close.

Wall Street

Strong economic data and gains in healthcare stocks propped up Wall Street early on Thursday, a day after the S&P 500 suffered its biggest fall in two months.

The S&P 500 index suffered its biggest one-day percentage drop on Wednesday, following weak housing data and losses in the technology sector. The triple-digit loss on the Dow pulled it further away from its march towards 20,000.

In early trading the Dow Jones industrial average was up 34.26 points, or 0.17 per cent, at 19,867.94 The S&P 500 was up 3.98 points, or 0.17 per cent, at 2,253.9. The Nasdaq Composite was up 10.93 points, or 0.2 per cent, at 5,449.49.

Nvidia's shares fell 2.5 per cent to $106.31, a day after short-seller Citron Research tweeted that the chipmaker's stock could fall to $90 in 2017. Shares of Advanced Micro Devices, Nvidia's rival, were off 0.7 per cent.

Cempra dropped 50 per cent to $2.98 after the drug developer said the US Food and Drug Administration rejected its antibiotic treatment for pneumonia.

Additional reporting: agencies