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Several companies' better-than-expected earnings help to limit U.S. market's decline

By Riva Gold and Aaron Kuriloff 

Consumer-discretionary stocks slipped and falling oil prices weighed on energy shares as U.S. stocks started the week lower.

Upbeat earnings reports helped cushion the U.S. market from broader global declines. Shares of Hasbro gained $5.66, or 7.4%, to $81.82 after the company posted stronger-than-expected earnings. Bank of America rose five cents, or 0.3%, to 16.05 after the lender became the latest U.S. bank to beat analysts' expectations.

The Dow Jones Industrial Average fell 51.98 points, or 0.3%, to 18086.40. The S&P 500 slipped 6.48 points, or 0.3%, to 2126.50, and the Nasdaq Composite declined 14.34 points, or 0.3%, to 5199.82.

Consumer-discretionary stocks were the worst-performing sector in the S&P 500, declining 0.8%. McDonald's fell the most in the Dow industrials, losing 1.68, or 1.5%, to 112.41 as more senior executives are set to announce their departures from the burger chain.

Energy shares in the S&P 500 declined 0.4% as U.S. crude fell 0.8% to $49.94 a barrel. Southwestern Energy lost 43 cents, or 3.3%, to 12.47.

The Stoxx Europe 600 shed 0.7% as long-dated government bonds plumbed their lowest levels since the U.K. vote to leave the European Union.

The yield on the 10-year U.S. Treasury note rose as high as 1.814%, its highest since early June, before retreating to 1.766%. Yields move inversely to prices.

While the recent rise in long-dated bond yields "feels like it's U.K.-led," this looks like a much more widespread reassessment of monetary and fiscal policy around the world, said James Athey, investment manager at Aberdeen Asset Management.

"Officials continue to signal a shift from monetary to fiscal stimulus," he said, which should suggest an environment where yields are higher and the yield curve is steeper.

Outside the U.K., investors also had grown concerned in recent weeks about the European Central Bank's plans for its bond-buying program. The bank holds a meeting Thursday, with many investors expecting confirmation that it doesn't plan to swiftly end its asset-purchase program. "We believe the ECB is still committed to its ultraloose monetary policy and that its main target is to fight off deflation," said Jean-François Clément, investment director at Unigestion.

On Monday, Eurostat left its estimate of the eurozone's annual rate of inflation for September unchanged at 0.4%. Rising inflation expectations had chipped away at the value of bonds in recent sessions.

Investors also focused on comments Friday from Federal Reserve Chairwoman Janet Yellen, who offered an argument for running the U.S. economy hot for a period to boost consumer spending and business investment.

The U.S. central bank meets Nov. 1-2, a week before the presidential election. In an interview with The Wall Street Journal, Boston Fed President Eric Rosengren signaled a willingness to keep interest rates steady in November and wait until mid-December before moving them higher.

Expectations have risen recently for the Fed to raise interest rates later this year, helping send the WSJ Dollar Index on Friday to its highest level since March.

The index, which measures the U.S. currency against 16 others, fell 0.2% Monday. The euro rose 0.3% against the dollar to $1.1002. The dollar was down 0.3% against the yen at Yen103.89 after rising against the Japanese currency for three consecutive weeks.

Shares in Asia mostly trended lower, with Hong Kong stocks among the biggest decliners on news that Chinese authorities detained employees at casino operator Crown Resorts for suspected gambling crimes.

The Hang Seng Index fell 0.8%, while the Shanghai Composite Index declined 0.7% and shares in Australia fell 0.8%.

Japan's Nikkei Stock Average gained 0.3%, as financial stocks caught up with Friday's gains in global lenders.

--Ese Erheriene contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Aaron Kuriloff at aaron.kuriloff@wsj.com

(END) Dow Jones Newswires

October 18, 2016 02:47 ET (06:47 GMT)

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