Stocks lower as Wall Street eyes testimony by former FBI chief Comey and UK elections

PUBLISHED : Wednesday, 07 June, 2017, 7:52am
UPDATED : Wednesday, 07 June, 2017, 7:52am

US equities closed lower on Tuesday as Wall Street hedged bets ahead of key events slated for later this week.

The Dow Jones industrial average fell 47.81 points, or 0.23 per cent, to close at 21,136.23, with Wal-Mart leading decliners and Exxon Mobil outperforming.

The S&P 500 slipped 6.77 points, or 0.28 per cent, to end at 2,429.33, with consumer discretionary leading nine sectors lower and energy and materials the only advancers.

The Nasdaq declined 20.63 points, or 0.33 per cent, to close at 6,275.06.

“The market took a small sigh of relief, but there’s still some caution because we don’t know what’s going to happen when (former FBI director James) Comey testifies,” said Adam Sarhan, CEO of 50 Park Investments.

Comey is slated to testify Thursday in front of the Senate intelligence committee, marking his first public comment since being fired by Trump.

“The Comey testimony may give us something to talk about. I think it could be a he-said-he-said situation which could put off what can be done in Washington,” said Bruce McCain, chief investment strategist at Key Private Bank.

Investors have remained vigilant about any new developments on the situation. Nevertheless, the major large-cap indexes have made new highs recently as pullbacks present new buying opportunities.

“It’s hard to figure out what exactly would put a dent on this market,” said Key Private Bank’s McCain. “Things haven’t been going too well but sentiment data has been strong.”

“It’s as if the Energizer Bunny has taken over and we’re just going higher and higher,” he said.

Bond prices, meanwhile, caught a bid as the benchmark 10-year note yield hit its lowest level since the days following the US presidential election. Gold prices also hit their highest level in seven weeks.

“Those two markets are maybe signalling concern” among investors, said Jeff Zipper, managing director of investments at the Private Client Reserve of US Bank. “The [stock] market has been flatlining in the past few days as it waits for some clarity.”

In economic news, job openings hit a record high in April, according to the Job Openings and Labour Turnover Survey (JOLTS), which showed a total of 6.0 million openings.

Craig Bishop, vice president of US fixed income at RBC Wealth Management, said that, while the US economy keeps perking along, inflation is still trailing the Federal Reserve’s desired levels.

“I think there’s some concern in the market that the Fed may be done raising rates after June,” he said. “We all know the Fed is data dependent. Right now, there’s a good chance the Fed holds after the June meeting.

The US central bank is set to meet next week, when it’s widely expected to raise rates.

Overseas, investors prepared for a general election in the United Kingdom set for Thursday. While a vast majority of observers still expect May to emerge victorious on Thursday, a Survation poll published last weekend placed the prime minister’s ruling right-wing Conservative Party ahead by just a single percentage point.

On Tuesday, the pan-European Stoxx 600 dropped 0.67 per cent, while the British pound slipped 0.1 per cent to US$1.289.