US investors turn to defensive stocks
DEFENSIVE shares led a rebound in US stocks yesterday as investors weighed mixed economic signals and commodities volatility.
The Dow industrials fell nearly 100 points in the morning but recovered later after a lacklustre auction of 30-year US bonds and reports suggesting negotiations to raise the US debt ceiling had intensified.
Financial shares fell after Rochdale Securities banking analyst Dick Bove put a “sell” rating on Goldman Sachs and reduced its target price to $120 from $163, citing litigation worries. Goldman shares slumped 3.5 per cent to $142.75 and volume topped the 50-day moving average.
Cisco Systems fell 4.8 per cent to $16.93 after it warned late on Wednesday it would fare worse this quarter than Wall Street forecast.
Defensive stocks like consumer staples have predictable revenues that make them attractive in volatile markets. Shares of Merck rose 1.6 per cent, while Tyson Foods rose 4.6 per cent.
The Dow Jones industrial average was up 65.89 points, or 0.52 per cent, at 12,695.92. The S&P 500 Index was up 6.57 points, or 0.49 per cent, at 1,348.65. The Nasdaq Composite Index was up 17.98 points, or 0.63 per cent, at 2,863.04.