US close: Stocks lose as Trump rally runs out of steam
A week after Donald Trump's unexpected election victory sent US stocks on a contrarian seven-day surge, the steam finally ran out on Wednesday as banks wobbled and the dollar notched up a 14-year high.
The Dow Jones Industrial Average could not build on its record closing high from the previous day, losing 55 points or 0.29% to close at 18,868.14 and the S&P 500 lost 3.45 points or 0.16% to 2,176.94.
The Nasdaq however gained almost 19 points or 0.36% to 5,294.58 as tech stocks, led by Apple and Microsoft, rebounded after their 'Trump dump'.
Oil prices were only just below flat, with West Texas Intermediate still above $45.
The dollar index hit a 14-year high of 100.57 during the Wall Street session, as markets continued to price-in the prospect of higher inflation and interest rates.
"The market is due for a correction, and we have two factors: the dollar ... and rising bond yields," said Peter Cardillo, chief market economist at First Standard Financial. "If you look at the 10-year yield, it's knocking on the door of 2.5 percent," he said. "At some point, that is going to prevent equities from going much higher."
Bank stocks JP Morgan and Goldman Sachs led the fallers as they particularly felt the pressure as investors digested renewed hawkish commentary from several Federal Reserve officials, the latest being Dallas Fed chief Robert Kaplan saying it was time to normalise interest rates.
Earlier St Louis Fed President James Bullard said only a "surprise" might keep the Fed from tightening in December.
However, said he believed just one more rate rise would be needed in order to bring rates back to "neutral", while also observing that policy changes mooted by the US President-elect such as on immigration and trade, were likely only to have an impact on the macroeconomy in the longer-term.
On the data front, the US producer price index was flat in October on weak services, following September’s 0.3% increase, and below the 0.3% consensus forecast.
In the year to October, the index increased 0.8%, the biggest gain since December 2014, following a 0.7% rise last month, and below the 1.2% last year.
While US industrial production also remained unchanged in October following a 0.2% drop in September, economists had expected output to rise 0.2%.
September’s figure was revised down from a previously-reported 0.1% increase. Manufacturing output increased 0.2%, while mining climbed 2.1%, its biggest rise since March 2014.
Even though factories stepped up production less than expected in October, the shortfall is unlikely to dissuade the Fed hiking interest rates in December, said Chris Williamson, chief business economist at IHS Markit.
“The resilient economic growth at the start of the fourth quarter, a strengthening labour market and signs of inflation creeping higher mean the Fed looks almost certain to hike interest rates again on 14 December. Inflation rose to a near two-year high of 1.5% in September and financial markets are pricing in further upward pressure on prices resulting from the stimulative policies likely to be introduced by president-elect Donald Trump."
He said he expected rates to gradually rise to 1.25% by the end of 2017 as the Fed tightens policy in response to a steady acceleration of economic growth and rising inflation, however it remains to be seen how businesses and consumers will react to the surprise election result.
In commodity markets, gold on Comex rose 0.27% to $1,227.80 per troy ounce at 1443 GMT.
In corporate news, shares in Lowe’s dropped as the DIY store chain’s third quarter results missed expectations.
Target’s shares soared as the retailer topped expectations. In the third quarter it earned $1.04 per share, on sales of $16.44bn, ahead of expectations of 83 cents on $16.3bn.
Elsewhere, LinkedIn’s shares were up following a report that Microsoft has offered concessions to EU regulators to get the okay for its $26bn bid for the social network.
Dow Jones - Risers
Apple Inc. (AAPL) $109.99 2.69%
Visa Inc. (V) $80.08 1.92%
Walt Disney Co. (DIS) $99.12 1.45%
Microsoft Corp. (MSFT) $59.65 1.32%
Verizon Communications Inc. (VZ) $47.93 1.18%
Nike Inc. (NKE) $50.69 1.10%
McDonald's Corp. (MCD) $119.21 0.75%
Home Depot Inc. (HD) $125.33 0.75%
International Business Machines Corp. (IBM) $159.25 0.39%
E.I. du Pont de Nemours and Co. (DD) $68.88 0.35%
Dow Jones - Fallers
JP Morgan Chase & Co. (JPM) $77.40 -2.47%
Goldman Sachs Group Inc. (GS) $206.32 -2.33%
Merck & Co. Inc. (MRK) $62.63 -1.60%
3M Co. (MMM) $172.01 -1.28%
Exxon Mobil Corp. (XOM) $85.75 -1.23%
Caterpillar Inc. (CAT) $93.35 -1.15%
Boeing Co. (BA) $146.45 -1.13%
American Express Co. (AXP) $71.68 -1.09%
Pfizer Inc. (PFE) $31.95 -0.84%
United Technologies Corp. (UTX) $106.96 -0.67%
S&P 500 - Risers
Target Corp. (TGT) $76.03 6.42%
Nvidia Corp. (NVDA) $91.63 6.31%
Alcoa Corporation (AA) $31.42 4.01%
TJX Companies Inc. (TJX) $76.41 3.95%
Frontier Communications Co. (FTR) $3.43 3.94%
Autodesk Inc. (ADSK) $77.57 3.22%
Crown Castle International (CCI) $85.09 2.78%
Apple Inc. (AAPL) $109.99 2.69%
Red Hat Inc. (RHT) $78.64 2.38%
International Flavors & Fragrances Inc. (IFF) $120.83 2.35%
S&P 500 - Fallers
Mallinckrodt Plc Ordinary Shares (MNK) $59.60 -12.02%
H&R Block Inc. (HRB) $22.23 -6.99%
Regions Financial Corp. (RF) $12.89 -4.73%
Endo International Plc (ENDP) $17.10 -4.15%
Whole Foods Market Inc. (WFM) $31.06 -3.66%
Martin Marietta Mtrl (MLM) $220.85 -3.63%
Southwestern Energy Co. (SWN) $10.80 -3.40%
Zions Bancorporation (ZION) $37.46 -3.35%
Kroger Co. (KR) $33.70 -3.33%
Vulcan Materials Co. (VMC) $130.28 -3.25%
Nasdaq 100 - Risers
Nvidia Corp. (NVDA) $91.63 6.31%
Autodesk Inc. (ADSK) $77.57 3.22%
Liberty Global plc Series A (LBTYA) $31.79 2.98%
Apple Inc. (AAPL) $109.99 2.69%
Liberty Global plc Series C (LBTYK) $31.13 2.37%
Sba Communications Corp. (SBAC) $99.24 2.25%
Cognizant Technology Solutions Corp. (CTSH) $55.33 2.14%
Yahoo! Inc. (YHOO) $40.98 1.91%
Alexion Pharmaceuticals Inc. (ALXN) $122.51 1.79%
Dollar Tree Inc (DLTR) $80.54 1.73%
Nasdaq 100 - Fallers
Whole Foods Market Inc. (WFM) $31.06 -3.66%
Biomarin Pharmaceutical Inc. (BMRN) $89.39 -3.05%
Vertex Pharmaceuticals Inc. (VRTX) $90.47 -2.78%
Incyte Corp. (INCY) $100.74 -2.35%
Regeneron Pharmaceuticals Inc. (REGN) $420.08 -2.00%
Mylan Inc. (MYL) $37.90 -1.97%
CSX Corp. (CSX) $33.87 -1.91%
Biogen Inc (BIIB) $317.65 -1.53%
Norwegian Cruise Line Holdings Ltd. - Ordinary Shares (NCLH) $39.57 -1.49%
Illumina Inc. (ILMN) $134.87 -1.41%