By Aaron Kuriloff and Sam Goldfarb
Investors sold shares of banks and industrial companies Wednesday, stalling a rally in the Dow Jones Industrial Average that began election week.
Government bonds also steadied after their recent selloff.
Many of the assets that were early winners after Donald Trump's victory pared gains midweek, including shares of banks, health-care companies, and materials and industrial firms.
Such sectors were among those swept up in investors' enthusiasm for the prospect of expansive fiscal spending, tax cuts and regulatory rollbacks from the president-elect. The potential of some of those policies to spur growth and inflation has put pressure on bond prices.
The Dow Jones Industrial Average fell 55 points, or 0.3%, to 18868, after closing at an all-time high Tuesday in its seventh straight session of gains. The S&P 500 fell 0.2% Wednesday while the Nasdaq Composite rose 0.4%.
Financial shares led declines in the S&P 500, falling 1.4%. That reduces the sector's postelection advance to 9.3%, ahead of the S&P 500's 1.7% climb.
Goldman Sachs Group, J.P. Morgan Chase & Co. and Caterpillar, which have gained more than 10% since the election, all fell Wednesday.
While some investors remain concerned the benefits of government spending could be outweighed by trade conflicts or growing debt under a Trump administration, "there's definitely a level of optimism I haven't seen in awhile," said Erik Davidson, chief investment officer at Wells Fargo Private Bank.
U.S. government bond prices edged up Wednesday, ending a six-session run of declines, as tepid economic data helped ease selling.
The yield on the benchmark 10-year U.S. Treasury note was 2.222%, compared with 2.240% Tuesday. Yields fall as prices rise.
The decline in yields came after the Labor Department said that U.S. business prices held flat in October, suggesting inflation pressures remain muted. Expectations for rising inflation under Mr. Trump have contributed to the recent bond rout, since inflation chips away at the value of longer-term government bonds over time.
Bonds strengthened further after the Federal Reserve said industrial production was also flat last month as mild weather reduced demand for home and office heating.
Large fiscal stimulus also typically requires an increase in government bond issuance, which could overwhelm demand and reduce prices further.
One question for investors now is whether the selloff will resume before more concrete details about Mr. Trump's policies emerge.
"Our view is that rates have room to go higher," said Annika Eiremo, a fund manager at Janus Capital Group Inc., a company with $195 billion under management. "It's still early stages of a very uncertain time period in terms of what policy will be," she said.
Oil prices fell, with U.S. crude prices down 0.5% at $45.57 a barrel.
The Stoxx Europe 600 fell 0.2% as banks surrendered some of their recent gains. The financial sector did boost Asian stock markets, however, with Japan's Nikkei Stock Average closing 1.1% higher.
contributed to this article.
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(END) Dow Jones Newswires
November 16, 2016 16:36 ET (21:36 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.