Wall Street slips after report China may slow U.S. bond purchases

Wall Street slips after report China may slow U.S. bond purchases

2018-01-10 15:09:19

(Reuters) – Wall Street’s major indexes slipped on Wednesday, stalling the rally that marked the start of 2018, after a report that China is considering slowing or halting purchases of U.S. government debt.

Apple APPL.O, Microsoft (MSFT.O) and Amazon (AMZN.O) were among the biggest drags on the S&P 500 and the Nasdaq, while a 0.7 percent drop in Boeing (BA.N) and Caterpillar (CAT.N) weighed on the Dow.

The S&P and the Nasdaq have closed at record highs on every single day in 2018, buoyed by optimism over global economic growth and expectations of a strong quarterly earnings.

“For a market that was probably looking for reason to take a pause, it’s not unreasonable to use today’s rise in yield as a catalyst,” said Art Hogan, chief market strategist at B. Riley FBR in Boston.

The dollar .DXY dropped 0.4 percent against a basket of currencies, while long-dated Treasury yields hit fresh 10-month highs after Bloomberg reported the U.S. bond market was becoming less attractive for Beijing.

The CBOE Volatility index .VIX, a widely followed measure of market anxiety, rose to its highest level in more than a week at 10.41.

At 9:46 a.m. ET (1446 GMT), the Dow Jones Industrial Average .DJI was down 67.02 points, or 0.26 percent, at 25,318.78 and the S&P 500 .SPX was down 7.64 points, or 0.27 percent, at 2,743.65. The Nasdaq Composite .IXIC was down 25.48 points, or 0.36 percent, at 7,138.09.

Nine of the 11 major S&P sectors were lower, led by a more than 1 percent fall in interest-rate sensitive sectors such as real estate .SPLRCR and utilities .SPLRCU.

Banking stocks led the gainers with JPMorgan (JPM.N) and Wells Fargo (WFC.N) rising about half a percent each. The two largest U.S. lenders will kick off the fourth-quarter earnings season on Friday.

Earnings for S&P 500 companies are expected to increase by 11.8 percent, with biggest contribution from the energy sector, according to Thomson Reuters I/B/E/S.

“It will be the first time that Corporate America has the ability to talk about guidance that incorporates lower tax rates. It’s going to be confusing and noisy but will be fascinating,” Hogan said.

No.2 U.S. homebuilder Lennar Corp (LEN.N) fell 0.3 percent after its profit missed estimates due to a delay in the booking of a single large transaction.

Nordstrom (JWN.N) was about 6 percent after the retailer reported holiday period same-store sales.

Nvidia (NVDA.O) slipped 1.6 percent after the chipmaker said some of its chipsets have been affected by a memory corruption flaw.

Declining issues outnumbered advancers on the NYSE by 1,916 to 774. On the Nasdaq, 1,627 issues fell and 896 advanced.

Reporting by Sruthi Shankar in Bengaluru; editing by Patrick Graham and Arun Koyyur

Our Standards:The Thomson Reuters Trust Principles.

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