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By Caroline Valetkevitch
NEW YORK (Reuters) - U.S. Treasury yields hit 10-month peaks as investors worried that China would slow U.S. government bond purchases, but they retraced to end nearly unchanged on Wednesday, and the S&P 500 stock index snapped its six-day rally.
The Bloomberg News report that China, the world's biggest holder of U.S. Treasuries, could slow or stop buying the government bonds also pushed the U.S. dollar to a more than six-week low against the Japanese yen.
The dollar rose against its Canadian counterpart
"The Chinese are applying pressure to the Treasury market just as the (Federal Reserve) is about to step away from being the buyer of last resort," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.
Benchmark 10-year note
The yield curve between two-year notes and 10-year notes
A combination of factors has pushed global bond yields higher in recent weeks, with global growth and higher oil prices leading investors to speculate that the world's major central banks might withdraw from their stimulus programme sooner rather than later.
On Wall Street, the Dow Jones Industrial Average <.DJI> fell 16.67 points, or 0.07 percent, to 25,369.13, the S&P 500 <.SPX> lost 3.06 points, or 0.11 percent, to 2,748.23 and the Nasdaq Composite <.IXIC> dropped 10.01 points, or 0.14 percent, to 7,153.57.
"The market has started on a very strong note this year. Right or wrong, you're hearing an overwhelming bullishness from strategists suggesting that the market momentum move should continue as the year progresses, so you have a lot of money flowing into the market," said David Katz, chief investment officer at Matrix Asset Advisors in New York.
"Today's move was negative. It's the first time basically in a year where people have any concerns about bonds possibly competing with stocks, so that's where you had the early selloff," he said, but the recovery from early lows points to the positive sentiment.
The pan-European FTSEurofirst 300 index <.FTEU3> lost 0.32 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.05 percent.
In the foreign exchange market, the dollar
The dollar index <.DXY> fell 0.18 percent.
U.S. crude futures
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)