November 6, 2017 / 2:02 PM / in a year

Dow edges up to record high, financials dips

(Reuters) - The Dow Jones Industrial Average eked out a fourth consecutive record high close on Tuesday, while the S&P 500 ended marginally lower after a disappointing profit forecast from Priceline and a drop in financials.

The S&P 500 financial index .SPSY led decliners with a 1.33 percent fall.

Defensive sectors such as utilities .SPLRCU and consumer staples .SPLRCS were the top gainers on the S&P 500, both rising more than 1 percent. Procter & Gamble (PG.N) added 1.08 percent.

The U.S. 2-to-10-year Treasury yield curve hit its flattest in a decade, potentially cutting into the profits of banks, which borrow money at short-term interest rates in order to lend it out at longer terms. US/N

Goldman Sachs (GS.N) lost 1.51 percent and weighed the most on the Dow, while JPMorgan (JPM.N) and Bank of America (BAC.N) were among the top three drags on the S&P 500.

Priceline PCLN.O slumped 13.52 percent while travel-review website operator TripAdvisor (TRIP.O) dropped 23.22 percent to a five-year low after both companies gave soft quarterly profit forecasts.

“Companies that miss expectations are being punished severely. That’s proof that there’s nervousness in the market,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

Investors were also nervous about the potential outcome of a Republican plan to cut corporate taxes, unveiled last week. As well as slashing the corporate rate to 20 percent from 35 percent, the bill would eliminate many tax breaks and is expected to face opposition from interest groups.

Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the opening bell in New York, NY, U.S. December 13, 2016. REUTERS/Lucas Jackson/Files

The Russell 2000 index , which tracks U.S. small-cap stocks, dropped 1.26 percent.

“There is some skepticism about the tax bill going through,” said Donald Selkin, chief market strategist at Newbridge Securities in New York.

“The fact that the Russell is down is a sign that there are worries about the fate of the tax bill because smaller companies tend to pay higher tax rates than bigger companies.”

The S&P 500 has risen about 15 percent in 2017, helped by strong earnings, an improving economy and promises by President Donald Trump to cut taxes.

The Dow Jones Industrial Average .DJI ended up 0.04 percent at 23,557.23 after spending most of the day in negative territory. The S&P 500 .SPX dipped 0.02 percent to 2,590.64.

The Nasdaq Composite .IXIC slipped 0.27 percent to 6,767.78.

In extended trade, Snap Inc (SNAP.N) slumped 16 percent after the Snapchat owner reported lower-than-expected daily active users for the third quarter.

During the session, Valeant Pharmaceuticals VRX.N surged 17.11 percent after the company’s profit beat Wall Street estimates.

Mallinckrodt (MNK.N) slumped 35.50 percent to an all-time low after the drugmaker reported dismal quarterly revenue and warned of slower sales for Acthar, its biggest source of revenue.

Declining issues outnumbered advancing ones on the NYSE by a 1.39-to-1 ratio; on Nasdaq, a 2.50-to-1 ratio favored decliners.

About 7.0 billion shares changed hands on U.S. exchanges, above the 6.4 billion daily average over the last 20 sessions.

Additional reporting by Tanya Agrawal; Editing by Dan Grebler and James Dalgleish

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