U.S. stocks traded mostly lower on Wednesday as a post-U.S. election rally slowed down while investors parsed through a host of economic data.
The Dow Jones industrial average traded about 60 points lower, on track to snap a seven-day winning streak, with Goldman Sachs contributing the most losses. The S&P 500 fell around 0.25 percent, with financials dropping 1.5 percent to lead decliners. The Nasdaq composite tried for gains after opening lower, trading about 0.16 percent higher as of 11:17 a.m. ET.
“Nothing lasts forever. It’s unusual to see such consistent upward trading,” said Mike Bailey, director of research at FBB Capital Partners. “Investors are taking a breath to say what if these policies don’t happen or don’t happen as quickly as thought.”
Yields, stocks and the U.S. dollar have rallied on the prospect of more growth-oriented economic policies from President-elect Trump, including higher infrastructure spending and deregulation of the financial sectors.
“The [stock] market is due for a correction, and we have two factors: the dollar … and rising bond yields,” said Peter Cardillo, chief market economist at First Standard Financial. “If you look at the 10-year yield, it’s knocking on the door of 2.5 percent,” he said. “At some point, that is going to prevent equities from going much higher.”
Treasury yields, along with the U.S. dollar, have also spiked since Nov. 8. On Wednesday, however, the benchmark 10-year note yield traded near the flatline, 2.226 percent. The dollar traded higher against a basket of currencies, with the euro near $1.067 and the yenaround 109.4.
“This is becoming extremely crowded trade and there are no signs that traders want to back off at all for the time being,” Naeem Aslam, chief market analyst at Think Markets, said in a note, referring to the dollar. “The strength in the dollar index does represent a risk for the emerging markets and it can also eat into corporate profit for the US firms.”
Interest rates and the dollar have also received a boost from the possibility of tighter monetary policy from the Federal Reserve.
According to the CME Group’s FedWatch tool, market expectations for a December rate hike were more than 90 percent. Earlier on Wednesday, St. Louis Fed President James Bullard said he would be surprised if the central bank did not raise rates next month.
In economic news, the October read on the U.S. producer price index came in unchanged, versus an expected increase of 0.3 percent. Industrial production for October was also unchanged.
Industrial production,however, “should improve as crude oil rises thanks to projected burgeoning demand as a consequence of new infrastructure spending and tax cuts for both businesses and individuals,” said Jeremy Klein, chief market strategist at FBN Securities, in a note.
Meanwhile, mortgage applications fell 9 percent amid the sharp increase in interest rates. Other reports released Wednesday included the Home Builders/Wells Fargo Housing Market index, which showed sentiment held steady.
In oil markets, U.S. crude futures climbed 0.57 percent to $46.09 per barrel after comments from the Russian energy minister offset bearish U.S. crude stockpile data.
Overseas, European equities traded mostly lower, with the pan-European Stoxx 600 index falling 0.22 percent. In Asia, stocks closed mostly higher, with the Nikkei 225 gaining 1.1 percent and the Korean Kospi advancing 0.62 percent.
—Reuters contributed to this report.
On tap this week:
4:00 p.m. TIC data
5:30 p.m. Philadelphia Fed President Patrick Harker
8:30 a.m. Initial claims
8:30 a.m. CPI
8:30 a.m. Housing starts
8:30 a.m. Philadelphia Fed survey
10 a.m. Fed Chair Janet Yellen testifies before the Joint Economic Committee of Congress on the economy
5:30 a.m. St. Louis Fed President James Bullard
9:30 a.m. New York Fed President William Dudley
9:30 a.m. Kansas City Fed President Esther George
1:30 p.m. Dallas Fed President Rob Kaplan