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Wall Street falls on China, NAFTA concerns

Reuters  |  NEW YORK 

By Sinead Carew

(Reuters) - The three major U.S. stock indexes ended lower on Wednesday after a choppy trading session as investors worried that would slow U.S. bond purchases and that U.S. would end a key trade agreement.

The and the Nasdaq snapped a six-day rally after reported that China, the world's biggest holder of U.S. Treasuries, could slow or stop buying the bonds. The report sent Treasury yields to a 10-month high.

The 500 pared some losses as yields backed away from their intraday peaks and investors digested the report. But the index lost ground again in mid-afternoon trading after reported that is increasingly convinced Trump will soon announce a U.S. exit from the North American Agreement. It cited two unnamed sources.

"It's a fairly light week for economic and financial data. In a week like this, political headlines can have a bigger impact than they normally would," said Jon Mackay, at Schroders in

While Mackay said the selloff was overblown, he noted that a change to NAFTA could hurt corporate earnings.

"If that is true, you'd expect a higher dollar price and a negative impact to earnings," said Mackay.

The <.DJI> fell 16.67 points, or 0.07 percent, to 25,369.13, the 500 <.SPX> lost 3.06 points, or 0.11 percent, to 2,748.23 and the <.IXIC> dropped 10.01 points, or 0.14 percent, to 7,153.57.

Investors were particularly skittish about the report as they worried that the market was overdue for a correction.

"It's a reflection of investor weariness and awareness that the market has risen for four straight months without seeing a major pullback," said Robert Pavlik, chief investment strategist, in

"As the day wore on, Treasury yields started to move lower on the realization the story doesn't have any legs," he said. "There's no way on earth the Chinese stop buying U.S. Treasuries."

The financial index <.SPSY> was the best performer among the 500's 11 major sectors with a 0.9 percent rise, helped by gains in , and .

Banks and companies often rise with bond yields as investors expect a profit boost from higher interest rates.

Rate-sensitive sectors such as and were the biggest losers with declines of 1.1 percent and 1.5 percent.

Investors started 2018 with high hopes for strong U.S. earnings growth. Banks will kick off earnings season on Friday.

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

rose 1.3 percent after the conglomerate promoted two top executives, cementing their status as the most likely successors to

Declining issues outnumbered advancing ones on the NYSE by a 1.59-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored decliners.

The 500 posted 74 new 52-week highs and 7 new lows; the recorded 98 new highs and 24 new lows.

Volume on U.S. exchanges was 6.93 billion shares, above the 6.38 billion average for the full session over the last 20 trading days.

(Reporting By Sinead Carew; Editing by Nick Zieminski)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Thu, January 11 2018. 03:08 IST