Wall Street slips after report China may slow US bond purchases

Banking stocks led the gainers with JPMorgan and Wells Fargo rising about half a per cent each. — Reuters pic
Banking stocks led the gainers with JPMorgan and Wells Fargo rising about half a per cent each. — Reuters pic

NEW YORK, January 10 — Wall Street’s major indexes slipped today, stalling the rally that marked the start of 2018, after a report that China is considering slowing or halting purchases of US government debt.

Apple, Microsoft and Amazon were among the biggest drags on the S&P 500 and the Nasdaq, while a 0.7 per cent drop in Boeing and Caterpillar 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 dropped 0.4 per cent against a basket of currencies, while long-dated Treasury yields hit fresh 10-month highs after Bloomberg reported the US bond market was becoming less attractive for Beijing.

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

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

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

Banking stocks led the gainers with JPMorgan and Wells Fargo rising about half a per cent each. The two largest US lenders will kick off the fourth-quarter earnings season on Friday.

Earnings for S&P 500 companies are expected to increase by 11.8 per cent, 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 US homebuilder Lennar Corp fell 0.3 per cent after its profit missed estimates due to a delay in the booking of a single large transaction.

Nordstrom was about 6 per cent after the retailer reported holiday period same-store sales.

Nvidia slipped 1.6 per cent 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.  — Reuters

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