US close: China, NAFTA worries end six day winning streak
Wall Street ended six straight days of gains on Wednesday as shares fell on reports that China might cut US government debt purchases and US President Donald Trump would end the NAFTA agreement.
At the close the Dow Jones Industrials Average was lower by 0.07% or 16.67 points to 25,351.75, alongside a 0.17% or 3.06 point dip for the S&P 500 to 2,748.43 and a fall of 0.39% or 10.01.87 points for the Nasdaq Composite to 7,153.57.
A Bloomberg report stated that some Chinese officials had recommended slowing down US debt purchases or ceasing all together because it was now less attractive relative to other possible investments and due to trade frictions.
The news sent longer-term Treasury yields to their highest in almost a year. The benchmark 10-year US Treasury note climb as high as 2.60% before the opening bell, which was just three basis points below the early-2017 highs, although it fell back to 2.52%.
A separate media report said Canada was increasingly convinced that Trump will soon announce US intentions to pull out of the North American Free Trade Agreement.
Oanda analyst Craig Erlam said if the China report was true “the repercussions could be significant as the country is one of the biggest holders of US debt”.
“A significant change in policy could put considerable upside pressure on US yields, the result of which would be an effective tightening for the US,” he said.
"The tightening effect of such measures would likely have an impact on how many times the Federal Reserve raises interest rates this year, which is why we’ve seen a corresponding drop in the dollar.”
On the economic front, US import prices rose by 0.1% on the month in December, falling short of the 0.4% increase forecast by economists.
In corporate news, Sears was in focus after saying it has raised $100m in new financing and is looking to raise another $200m from other counterparties.
Shares in Supervalu were also active, plummeting after the release of the retailer's third-quarter numbers, while Eastman Kodak surged after the company said it was launching a cryptocurrency.
United Continental Holdings rose after the airline said late on Tuesday that traffic was up 2.7% on the year in December.
Technology giant Apple was slightly lower after it faced new questions from the US and France over its battery-related performance issues with iPhones.