Time out was called on the recent market rally as stocks finished mostly lower on Wednesday for the first time since the start of the year. Two depressants were reports that President Donald Trump will exit the North American Free Trade Agreement (NAFTA) and China is said to be mulling slowing US government bond purchases sending markets in to a tizzy as it coincides with signs of central banks are pulling back from bond-buying stimulus measures .
The three major market indicators trimmed earlier losses and the sell off was broad. Gains were made in only two sectors, energy and financials. Higher US government bond yields impelled gains for banks (higher yields generally means higher earnings for banks) and inflation watching becomes the focus. Rising Treasury yields boosted the dollar making it an attractive asset for yield-seeking investors.
The S&P 500 ended the session down -0.11%. NASDAQ fell -0.14% at close. The Dow Jones industrial average comprising the 30 largest ended down -0.03% and among big losers were Apple down -0.18% to $174.02 and Intel dropped -2.35% to $42.60. Signs were other chip-makers were shaking off Spectre security flaw as AMD rose +1.18% to $11.96 and Nvidia was up +0.78% to $223.68.
Banks rallied with Goldman Sachs up +0.15% to $254.33 and JPMorgan Chase advanced +1.10% to $110.25. Top percentage losers on the S&P 500 index were Signet Jewelers fell -6.89% to $52.69 and eBay down -4.63% to $37.70.
Elsewhere gold was up +0.34% to $1,318 per ounce and crude oil closed up its highest in three years after US data showed crude stockpiles declined for the eighth straight week.
Dow 25,370.99 -0.06%
S&P 500 2,748.20 -0.11%
NASDAQ 7,153.57 -0.14%
Russell 2000 1,558.06 -0.13%
NYSE Composite 13,103.32 +1.13%
Gold 1,318.7 +0.37%
Oil WTI $63.41 +0.71%
10-Year Treasury 2.55 +0.05%
Canada worries about a US NAFTA exit
Reports from Reuters and Bloomberg indicate that the Canadian government was said to be increasingly worried by the possibility President Donald Trump may give six months notice to exit NAFTA.
Exclusive: Canada increasingly convinced of Trump NAFTA pullout - sources https://t.co/IfW9N2m1MS— Reuters Top News (@Reuters) January 10, 2018
White House officials deny there was any change in policy. Talks among the three partipants of the agreement are to be held in Montreal on 23 January. In the past, Trump has made forceful statements about his intent to walk away if he doesn't get a deal that he wants.
Immediate reaction from NAFTA supporters was that any such move could be destructive to the US and particularly farmers. Analyst Jens Nordvig said on CNBC that it could prove to be devastating for the dollar which would lose out to the euro and yen.