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U.S. stocks rise as banks and health care companies climb

ASSOCIATED PRESS

In this Oct. 23 photo, trader Peter Tuchman, center, works on the floor of the New York Stock Exchange.

NEW YORK >> U.S. stocks mostly rose today as financial and health care companies finished higher, while Apple and other technology companies continued to fall. Asian indexes fell following weak economic data in China and a lack of progress in trade negotiations between the U.S. and China.

Warren Buffett’s Berkshire Hathaway, which owns Geico and other insurance businesses, led the rally in financial stocks after it reported strong results over the weekend. Drugmakers including Eli Lilly also climbed. Apple took another sharp loss, which knocked the tech giant’s market value below the $1 trillion mark.

Real estate companies, utilities, and other high-dividend stocks finished with solid gains as high-growth stocks like tech and internet companies slipped. Smaller and more U.S.-focused companies also lagged.

Big technology companies and small companies were both hit hard during the market’s slump in October. Tech companies fell as investors worried about the trade dispute and about an increase in interest rates, which could erode their future profits. Smaller companies are vulnerable to higher interest rates because they tend to carry more debt.

Earnings for S&P 500 companies are on track to grow about 20 percent this year, and analysts expect company profits to grow another 10 percent next year, according to FactSet. But Jim Paulsen, chief investment strategist for the Leuthold Group, said that might be too optimistic because costs and interest rates are rising and global economic growth could slip.

“It’s a double whammy of slowing sales at the same time we may be starting to (see pressure on) profit margins,” he said. Paulsen said corporate earnings could fall next year, and smaller companies might have a hard time dealing with that.

“Large companies tend to operate with bigger profit margins, and they have more room as a result of that to allow them to cut and to deal with a slowdown,” he said.

The S&P 500 index added 15.25 points, or 0.6 percent, to 2,738.31. The Dow Jones Industrial Average rose 190.87 points, or 0.8 percent, to 25,461.70.

The Nasdaq composite sank 28.14 points, or 0.4 percent, to 7,328.85. The Russell 2000 index of smaller-company stocks slipped 0.47 point to 1,547.51.

Stocks plunged in October, but last week was the market’s best week since March. One reason for that recovery was increased optimism about trade talks, as Chinese officials and President Donald Trump said a phone conversation between Trump and China’s President Xi Jinping had gone well. Today, Xi promised to reduce costs for importers and raise consumer spending power, but he did not address the technology policy dispute between the U.S. and China, a critical part of the trade impasse.

Berkshire Hathaway said its profit quadrupled in the third quarter as the value of its investments climbed. It also reported better results from its insurance and railroad divisions. Berkshire bought back almost $1 billion in stock during the quarter, the most in years. Its Class B stock climbed 4.7 percent to $216.24. Other insurers and banks also rose.

Apple lost another 2.8 percent to $201.59. The stock tumbled Friday following a weak fourth-quarter forecast. Apple also said it will stop announcing how many iPhones it sold each quarter. Daniel Ives of Wedbush said that while Apple’s announcement felt “flippant,” it’s actually part of a strategy intended to get investors to see the company as a services provider and not just a device seller.

In early August Apple became the first publicly traded company valued at $1 trillion, but today’s decline brought its value down to $958.6 billion.

After big gains late last week, Japan’s Nikkei 225 index fell 1.5 percent and South Korea’s Kospi dropped 0.9 percent. Hong Kong’s Hang Seng index fell 2.1 percent.

Benchmark U.S. crude slipped 0.1 percent to $63.10 a barrel in New York. Brent crude, used to price international oils, added 0.5 percent to $73.17 per barrel in London.

Natural gas soared 8.6 percent to $3.57 per 1,000 cubic feet following forecasts for cold weather in the next few days. According to the Energy Department, nearly half of all U.S. households use natural gas as the primary source for heating. Its price often surges when investors expect a cold snap. Heating oil also rose 1.1 percent to $2.20 a gallon.

Wholesale gasoline lost 1 percent to $1.69 a gallon.

Britain’s FTSE 100 rose 0.1 percent while Germany’s DAZ fell 0.2 percent. The CAC 40 in France was little changed.

The British pound rose even though the office of British Prime Minister Theresa May dismissed reports the country is close to reaching a divorce agreement with the European Union. Officials have said negotiators are on the brink of a deal, which could be reached this month.

The pound rose to $1.3053 from $1.2963.

Bond prices rose. The yield on the 10-year Treasury note fell to 3.20 percent from 3.21 percent late Friday.

Gold fell 0.1 percent to $1,232.30 an ounce. Silver lost 0.7 percent to $14.65 an ounce. Copper shed 1.8 percent to $2.76 a pound.

The dollar slipped to 113.21 yen from 113.28 yen. The euro rose to $1.1418 from $1.1398.

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