Wall St. treads water as rising interest rates balance tech growth

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NEW YORK (Reuters) – Wall Street’s main indexes seesawed in choppy trade on Thursday, as gains in tech stocks offset losses in interest-rate sensitive sectors.

Gains in tech stocks lifted the Nasdaq, while the SP was flat and the Dow sagged just a day after closing above 26,000 for the first time.

Utilities .SPLRCU and real estate .SPLRCR dipped 0.2 percent and 0.8 percent, respectively. The two dividend-sensitive sectors, which are considered bond proxies, fell as yields on 10-year Treasury notes hit a 10-month high.

“We’ll continue to see a tug of war between how fast the economy grows and how fast interest rates rise,” said Kate Warne, investment strategist at Edward Jones in St. Louis. “It’s likely to lead to more volatility in 2018 than we saw in 2017.”

Boeing (BA.N), a high-flying stock of late, fell 2.8 percent. Its decline weighed on the Dow as well as the industrials sector .SPLRCI, which fell 0.5 percent.

The Dow Jones Industrial Average .DJI fell 48.87 points, or 0.19 percent, to 26,066.78, the SP 500 .SPX gained 0.69 points, or 0.02 percent, to 2,803.25 and the Nasdaq Composite .IXIC added 11.43 points, or 0.16 percent, to 7,309.71.

Investors are keeping a close eye on corporate earnings reports, given the run-up in stock valuations.

Morgan Stanley (MS.N) wrapped up earnings season for the big U.S. banks with a better-than-expected quarterly profit, driving modest gains in its shares.

Bank of New York Mellon (BK.N) fell 4.1 percent after the custodian bank said it expected to book more in severance costs in 2018.

Alcoa (AA.N) tumbled 7.5 percent after the aluminum producer’s earnings missed analysts’ estimates.

The possibility of a government shutdown also loomed, though Warne said she believed it would have more impact on Wall Street’s performance if an agreement was not reached by the end of Friday.

Republicans are seeking to pass a temporary extension in funding government operations to avert a shutdown. The government is operating on its third temporary funding extension since the 2018 fiscal year began on Oct. 1.

Declining issues outnumbered advancing ones on the NYSE by a 2.14-to-1 ratio; on Nasdaq, a 1.42-to-1 ratio favored decliners.

The SP 500 posted 84 new 52-week highs and 11 new lows; the Nasdaq Composite recorded 120 new highs and 22 new lows.

Additional reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva and Nick Zieminski

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