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Stocks close lower led by declines in banks

Traders work on the floor of the New

Traders work on the floor of the New York Stock Exchange, Tuesday, May 30, 2017. Credit: Bloomberg News / Michael Nagle

Stocks closed modestly lower on Wall Street for the second day running, led by declines in banks as investors worry how their trading businesses are doing.

Top executives from JPMorgan Chase and Bank of America said Wednesday that trading revenue were declining this quarter as markets remain calm. JPMorgan fell 2.1 percent and Bank of America fell 1.9 percent.

Energy companies fell along with a steep drop in the price of crude oil. Occidental Petroleum fell 2 percent.

Safe-play stocks like phone companies and utilities rose.

The Standard & Poor’s 500 index slipped 1 percent, or 0.1 percent, to 2,411.

The Dow Jones industrial average lost 20 points, or 0.1 percent, to 21,008.

The Nasdaq composite gave up 4 points, or 0.1 percent, to 6,198.

BANKS: Banks fell as investors worried that their revenue from trading stocks, bonds and currencies is going to weaken in the second quarter. Executives from JPMorgan Chase and Bank of America both spoke about that issue at industry events on Wednesday. Bank of America CEO Brian Moynihan said trading revenue will fall 10 percent compared to a year ago.

The banking industry had an outstanding first quarter, and trading was a key reason for that. JPMorgan Chase fell $1.87, or 2.2 percent, to $82.03 and Capital One slumped $1.63, or 2.1 percent, to $76.65.

Goldman Sachs, which had an unusually bad quarter as its trading business struggled, gave up $7.28, or 3.3 percent, to $211.14.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.20 percent from 2.21 percent. That also hurt banks, as lower bond yields force interest rates lower on loans, reducing banks’ profits from lending.

ENERGY: Benchmark U.S. crude lost $1.34, or 2.7 percent, to $48.32 a barrel in New York. Brent crude, the standard for international oil prices, fell $1.53, or 3 percent, to $50.31 a barrel in London. Energy stocks continued to decline. Chevron sank 61 cents to $103.45 and Hess declined $1.04, or 2.2 percent, to $45.63.

FEELING BETTER: Pfizer rose 58 cents, or 1.8 percent, to $32.71 and Irish drugmaker Perrigo climbed $3.71, or 5.5 percent, to $71.63 after its first-quarter report was better than expected. Health care products maker Johnson & Johnson advanced $1.45, or 1.1 percent, to $128.56.

Household products companies also rose. Clorox gained $1.31, or 1 percent, to $136.24 and Kimberly-Clark, which makes Huggies diapers and Kleenex tissue, picked up $1.98, or 1.5 percent, to $130.95. Procter & Gamble, which makes Tide detergent and Charmin toilet paper, advanced 77 cents to $88.17.

KORS GETS CORED: Michael Kors Holdings hit a five-year low after it said it will close up to 125 stores as its sales have remained weak. The luxury retailer said sales at older stores dropped in its latest quarter and investors were disappointed with its projections for the current quarter. The stock tumbled $3.51, or 9.7 percent, to $32.76.

CLOUDY DAY FOR SOLAR: Solar power companies took losses as investors expected President Donald Trump to pull the U.S. out of the Paris climate change agreement. Officials from the European Union said the EU and China will maintain their commitments to the pact. Shares of First Solar, the largest U.S. solar company, declined 92 cents, or 2.3 percent, to $38.58. SunPower fell 23 cents, or 2.8 percent, to $7.92 while solar wafer maker Canadian Solar retreated 73 cents, or 5.4 percent, to $12.81.

HITTING RESET: Technology companies turned lower. The tech sector has reached its highest levels since the dot-com boom and companies like Apple, Google parent Alphabet and Facebook have done far better than the rest of the market in 2017. Apple and Facebook are up 32 percent this year, and Alphabet is up 24 percent. All three slid Wednesday.

CURRENCIES: The dollar slipped to 110.68 yen from 110.78 yen. The euro rose to $1.1239 from $1.1188. The British pound rose to $1.2882 from $1.2813. The currency was volatile after polls and surveys showed the general election on June 8 might be closer than expected. Early on, observers expected the Conservative Party of Prime Minister Theresa May to win in a landslide. May supports Britain’s exit from the European Union, and if she wins a smaller majority, it could hurt her side as Britain negotiates its departure from the union.

OTHER ENERGY TRADING: Wholesale gasoline lost 3 cents to $1.61 a gallon. Heating oil gave up 3 cents to $1.52 a gallon. Natural gas dropped 7 cents to $3.07 per 1,000 cubic feet.

METALS: Gold rose $9.70 to $1,265.40 an ounce. Silver fell 2 cents to $17.41 an ounce. Copper gained 2 cents to $2.58 a pound.

OVERSEAS: European stocks gave up an early gain. The DAX in Germany remained up 0.1 percent, but France’s CAC 40 lost 0.4 percent and the British FTSE 100 fell 0.1 percent. Japan’s Nikkei 225 index dipped 0.1 percent and South Korea’s Kospi gained 0.2 percent. The Hang Seng in Hong Kong inched down 0.1 percent.

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