US stocks retreat from records as Europe eyes Catalan crisis

Wall Street took a breather after a record-breaking run

Wall Street stocks retreated from records Thursday as investors soured on financial shares following earnings from large banks. The pullback in the US came on a mixed day for European equities as investors continued to weigh the murky politics surrounding the Catalan independence movement.

US stocks have been on a tear since President Donald Trump last month unveiled a much-anticipated tax cut plan.

But they fell back Thursday despite better-than-expected earnings from JPMorgan Chase and Citigroup. Both companies fell after the reports, with Citigroup shedding 3.4 percent.

“Considering the overbought nature of the stock market, the market was vulnerable to a negative surprise, or to … profit taking,” said Karl Haeling of LBBW. “You do have to wonder, at what point are we going to get a correction?”

Europe’s stock markets held mostly steady as tensions eased over Catalonia.

- S&P warns on Catalonia -

Madrid investors, took profits a day after a relief rally to push the Ibex a touch lower in closing trade. Spanish shares had surged Wednesday after Catalan leader Carles Puigdemont called for independence to be suspended to allow for talks with the Spanish government.

Still, ratings agency Standard and Poor’s warned that the crisis over Catalan independence from Spain could push the region into recession.

“The tensions between Catalonia and the central government, if unchecked, could lead to a sustained drop in business confidence and potential business disruption,” said S&P credit analyst Elena Iparraguirre.

The euro retreated against the dollar, but the pound moved higher against the greenback following a report in German newspaper Handelsblatt that Britain could be given a two-year extension to complete Brexit due to a deadlocking in negotiations between Britain and the European Union over terms of the divorce.

Oil prices fell after the International Energy Agency warned that more output restraint is needed from OPEC producer countries if the market is to find a sustainable balance.

Among individual equities, HSBC dropped 1.6 percent after announcing that it had chosen John Flint, its head of retail banking and wealth management, to succeed Stuart Gulliver as chief executive, who is retiring.

German airline Lufthansa jumped 1.8 percent as it announced plans to buy more than half the planes of bankrupt Air Berlin. Lufthansa has yet to say how much it will pay under the deal, but Lufthansa chief executive Carsten Spohr told newspaper Rheinische Post that the group would invest 1.5 billion euros ($1.8 billion) in its low-cost subsidiary Eurowings following the takeover.

AT&T sank 6.1 percent as it confirmed many of its full-year financial targets, but said it expects a hit of $210 million in pre-tax earnings in the third quarter due to US hurricanes and earthquakes in Mexico.

AT&T also said it expects a drop of 90,000 in total US video subscribers as more consumers shun traditional cable packages in favor of streaming and other “over-the-top” services.

- Key figures around 2100 GMT -

New York - DOW: DOWN 0.1 percent at 22,841.01 (close)

New York - S&P 500: DOWN 0.2 percent at 2,550.93 (close)

New York - Nasdaq: DOWN 0.2 percent at 6,591.51 (close)

London - FTSE 100: UP 0.3 percent at 7,556.24 (close)

Frankfurt - DAX 30: UP 0.1 percent at 12,982.89 (close)

Paris - CAC 40: DOWN less than 0.1 percent at 5,360.81 (close)

Madrid - IBEX 35: DOWN less than 0.1 percent 10,275.90 (close)

EURO STOXX 50: DOWN 0.1 percent at 3,605.54

Tokyo - Nikkei 225: UP 0.4 percent at 20,954.72 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 28,459.03 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,386.10 (close)

Euro/dollar: DOWN at $1.1828 from $1.1864 at 2100 GMT

Pound/dollar: UP at $1.3260 from $1.3225

Dollar/yen: DOWN at 112.29 yen from 112.50 yen

Oil - Brent North Sea: DOWN 69 cents at $56.25 per barrel

Oil - West Texas Intermediate: DOWN 70 cents at $50.60 per barrel