Banks, lenders and other financial companies fell sharply -- despite another round of strong earnings -- as interest rates slid. Recent comments from President-elect Donald Trump about trade and the dollar have caused traders to back off predictions of what the president elect's economic policy will look like. As a consequence, the run-up in Treasury yields -- and stocks -- has stalled. One brokerage said the postelection rally could resume later in the year, however. "The bullish sweet spot of Presidential Cycle Year 1 is March-July, which has an average gain of 7.86% (average March-August rally of 11.15% for a first term President)," said analysts at Bank of America Merill Lynch Global Research. "This fits with the potential for a 10% melt-up in stocks and commodities in the first half of 2017" after "wobbles" in January and February. Morgan Stanley posted its best fourth-quarter results since the financial crisis, helped by increased activity on its trading desks and for its army of financial advisers. But shares of the bank and other strong earners fell in a reaction that Carter Worth, chief market technician for research firm Cornerstone Macro called "classic...buy the rumor, sell the news" trading.

-Rob Curran, rob.curran@dowjones.com

(END) Dow Jones Newswires

January 17, 2017 16:49 ET (21:49 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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