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Last updated: September 19, 2013 11:00 pm
US stock stepped back from record levels following Wednesday’s sharp uptick that was spurred by the Federal Reserve’s announcement that it would not begin to scale back its quantitative easing programme.
Insurers were among the worst performers as investors anticipate that the Fed’s efforts to maintain low interest rates will cut into profits.
MetLife shares declined 3.2 per cent to $47.08 and are now off 6.8 per cent since the Fed’s announcement.
The insurer, known for using Peanuts character Snoopy as its mascot, is up 43 per cent in 2013 as strong earnings and rising interest rates have cheered investors.
Expectations that the Fed’s announcement would mark the start of the end of quantitative easing and cause an increase in rates fuelled the rally by insurers, and caused a reversal when tapering was delayed and rates fell, said Suneet Kamath, research analyst at UBS.
“I think it’s a situation where sentiment lifted these stocks on expectations for higher interest rates and as that expectation is adjusted downwards, the valuation multiples adjust downwards,” he said.
“It’s a move in the right direction, but I’m not sure it’s going to dramatically change the earnings outlook for next year.”
Although not back near pre-crisis levels that briefly broke the $70 level, shares of MetLife have steadily recovered despite facing tighter regulation.
The S&P 500 fell 0.2 per cent to 1,722.33, led by a 0.1 per cent rise by the information technology and industrials sectors. The benchmark index touched a new intraday high of 1,729.86 in early trading.
The Dow Jones Industrial Average lost 0.3 per cent to 15,636.55 and the Nasdaq Composite ticked up 0.2 per cent to 3,789.38.
Apple helped keep the Nasdaq in positive territory, rising 1.6 per cent to $472.30. Analysts’ predictions for sales of the new iPhones released this weekend have cheered investors initially disappointed by the company’s new offerings.
But Apple shares remain 6.7 per cent lower since the new products were announced.
Retailer Rite Aid was among the strongest stocks on the day, up 23.5 per cent to $4.58.
The company announced an unexpected profit in the second quarter and lifted its outlook for 2014.
Earnings news from ConAgra Foods was not as encouraging as the company missed first-quarter earnings per share expectations.
The company warned earlier in September that profits would come in below expectations, sending its shares lower.
But the early warning was unable to save ConAgra shares from falling 4 per cent on Thursday to $30.80, now down 11.8 per cent on the past month.
Online coupon issuer Groupon benefited from a Stifel Nicolaus upgrade to “buy” from “hold”. Shares in the company added 9.1 per cent to $12.60.
Home furnishings retailer Pier 1 Imports also fell after earnings missed analysts’ forecasts. The company also scaled back its 2014 forecast. Pier 1 shares fell 13.9 per cent to $20.33.
JPMorgan Chase shares were down 1.2 per cent to $52.75 after news broke that the bank would face $920m in fines related to the London “Whale” trading losses.
The bank has endured a variety of scandals in 2013, including a $410m settlement for charges of rigging power markets, and faces a $6bn penalty over allegations that it missold securities to government-backed mortgage companies.
Despite these difficulties, JPMorgan shares are up 20 per cent on the year to date.
Shares of electric carmarker Tesla hit another high, up 7 per cent to $177.92.
Deutsche Bank raised its price target on Tesla shares to $200 from $160 while chief executive Elon Musk has stated publicly that the company will pursue the production of automated cars that require little human direction – a technology he believes will be ready within three years.
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