U.S. stocks mostly rose Monday 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