By Akane Otani and Christopher Whittall
The Dow Jones Industrial Average fell Thursday as investors dialed back on some of the most popular postelection trades.
Stocks had flitted between slight gains and losses through much of the morning. But around midday, the blue-chip index was down more than 100 points as investors dumped shares of financial and industrial companies while snapping up government bonds and gold.
The dollar pulled back. The WSJ Dollar Index, which measures the dollar against a basket of 16 other currencies and had recently surged to a 14-year high, was down 1%.
The S&P 500 financials sector -- among the best performers since Election Day -- fell 1.7%. Travelers, Goldman Sachs Group, J.P. Morgan Chase and American Express led declines in the Dow industrials.
Government bonds rallied, with yields on the 10-year U.S. Treasury note falling to 2.359%, according to Tradeweb, from 2.452% Wednesday. Yields fall as bond prices rise. Gold was recently up 1.5% at $1,182.50 an ounce.
The Dow industrials fell 108 points, or 0.5%, to 19834 after two consecutive sessions of gains. The S&P 500 fell 0.4% and the Nasdaq Composite slipped 0.1%.
Investors betting on a higher growth, higher rate environment under President-elect Donald Trump have sold assets perceived as havens -- like gold, government bonds, and their stock-market proxies -- while lifting stocks, especially financials. But some analysts and investors have questioned how much further stocks trading near all-time highs and at higher-than-average valuations can run.
On Wednesday, minutes from the Federal Reserve's December meeting showed officials were unsure about the potential impact of Mr. Trump's policies on the economy.
"Most people are trying to extend this positive sentiment from last year, but we do have some caution in the coming months something could turn," said Jeroen Blokland, a senior portfolio manager at Robeco, who is taking a neutral stance on equities right now.
Risks that could derail the stock market rally include a re-emergence of concerns over China's economy or disappointing corporate earnings, he said.
China was in the spotlight again Thursday as the yuan rose sharply against the U.S. dollar, tracking an even more dramatic rise in the offshore yuan late Wednesday.
Meanwhile, oil prices fell after data from the Energy Information Administration showed U.S. crude inventories declined more than expected for the week ended Dec. 30, but fuel stockpiles rose. U.S. crude was recently down 0.2% at $53.15 a barrel and energy shares fell 0.5% in the S&P 500.
Shares of consumer-discretionary companies tumbled after retailers including Macy's and Kohl's warned of weak holiday results.
Macy's, which said Wednesday that its same-store sales fell in November and December, fell 14%. Kohl's, which lowered its profit targets, fell 20%, while other retailers including Nordstrom, L Brands and Michael Kors fell more than 5% apiece.
Elsewhere, stocks in Europe were little changed, with gains in health-care and telecom shares offsetting losses in energy companies and utilities.
In Asia, Hong Kong's Hang Seng Index rose 1.5% after purchasing managers index reports from China and Hong Kong registered improvements. The Nikkei Stock Average ended down 0.4% after rising 2.5% on Wednesday.
Write to Akane Otani at email@example.com and Christopher Whittall at firstname.lastname@example.org
(END) Dow Jones Newswires
January 05, 2017 13:37 ET (18:37 GMT)
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